48241 THE WORLD BANK GROUP 2008 Annual Meetings of the Boards of Governors Summary Proceedings Washington D.C. October 11­13, 2008 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page i THE WORLD BANK GROUP 2008 ANNUAL MEETINGS OF THE BOARDS OF GOVERNORS SUMMARY PROCEEDINGS WASHINGTON, D.C. OCTOBER 11­13, 2008 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page ii THE WORLD BANK GROUP Headquarters 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. Telephone: (202) 477-1234 Telex Nos: FTCC 82987 RCA248423 WUI64145 TRT197688 Facsimile: (202) 477-6391 Internet: http://www.worldbank.org Cable Address World Bank: INTBAFRAD IFC: CORINTFIN IDA: INDEVAS MIGA: MIGAVEST 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page iii INTRODUCTORY NOTE The 2008 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 11­13, 2008 in Washington, D.C. The Honorable Zoran Stavreski, Governor of the Bank and the Fund for Former Yugoslav Republic of Macedonia, served as the Chairman. The Summary Proceedings record, in alphabetical order by member countries, the texts of statements by Governors, the resolutions and reports adopted by the Boards of Governors of the World Bank Group. The texts of statements concerning the IMF are published separately by the Fund. Kristalina I. Georgieva Vice President and Corporate Secretary THE WORLD BANK GROUP Washington, D.C. March, 2009 iii 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page iv 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page v CONTENTS Page Opening Address by the Chairman Zoran Stavreski Governor of the Bank and the Fund for Former Yugoslav Republic of Macedonia . . . . . . . . . . . . 1 Opening Address by Robert Zoellick President of the World Bank Group . . . . . . . . . . . . . . . . . 7 Report by Agustín Carstens Chairman of the Development Committee . . . . . . . . . . . 18 Statements by Governors and Alternate Governors . . . . . . 21 Afghanistan . . . . . . . . . . 21 Lao, PDR . . . . . . . . . . . . 89 Australia . . . . . . . . . . . . 23 Malaysia . . . . . . . . . . . . 92 *Bahamas . . . . . . . . . . . 29 Malta . . . . . . . . . . . . . . . 96 Bangladesh . . . . . . . . . . 32 Moldova . . . . . . . . . . . . 99 Belgium . . . . . . . . . . . . . 34 Myanmar . . . . . . . . . . . . 102 Bolivia . . . . . . . . . . . . . . 36 Nepal . . . . . . . . . . . . . . . 104 Cambodia . . . . . . . . . . . 37 Netherlands . . . . . . . . . . 106 Canada . . . . . . . . . . . . . . 42 New Zealand . . . . . . . . 111 China . . . . . . . . . . . . . . . 47 Pakistan . . . . . . . . . . . . . 115 Croatia . . . . . . . . . . . . . . 49 Philippines . . . . . . . . . . . 117 *Estonia . . . . . . . . . . . . . 53 Poland . . . . . . . . . . . . . . 119 Fiji . . . . . . . . . . . . . . . . . 55 Russian Federation . . . 120 France . . . . . . . . . . . . . . 59 *Sierra Leone . . . . . . . . 123 Germany . . . . . . . . . . . . 63 Spain . . . . . . . . . . . . . . . 127 Greece . . . . . . . . . . . . . . 65 Sri Lanka . . . . . . . . . . . . 129 Haiti . . . . . . . . . . . . . . . . 66 *Sudan . . . . . . . . . . . . . . 131 India . . . . . . . . . . . . . . . . 68 Switzerland . . . . . . . . . . 135 Indonesia . . . . . . . . . . . . 69 Thailand . . . . . . . . . . . . . 139 Iran, Islamic Republic of 73 Timor­Leste . . . . . . . . . 144 Ireland . . . . . . . . . . . . . . 75 Tonga . . . . . . . . . . . . . . . 145 Israel . . . . . . . . . . . . . . . 78 Turkey . . . . . . . . . . . . . . 148 Japan . . . . . . . . . . . . . . . 80 United States . . . . . . . . 150 *Kiribati . . . . . . . . . . . . 84 Vietnam . . . . . . . . . . . . . 152 Korea . . . . . . . . . . . . . . . 87 * Speaking on behalf of a group of countries. v 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page vi Page Concluding Remarks by the Chairman the Honorable Zoran Stavreski . . . . . . . . . . . . . . . . . . . . 158 Remarks by Nguyen Van Giau, Governor of the Fund for Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Documents of the Boards of Governors . . . . . . . . . . . . . . . . 161 Schedule of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Provisions Relating to the Conduct of the Meetings . . 162 Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Joint Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Report II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Report III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 MIGA Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . . 169 Report I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Resolutions Adopted by the Board of Governors of the Bank between the 2007 and 2008 Annual Meetings . . . . . . . . . 172 No. 589 Transfer from Surplus to Replenish the Trust Fund for Gaza and West Bank . . . . . . . 172 No. 590 Transfer of IBRD Surplus to Food Price Crisis Response Trust Fund . . . . . . . . . . . . . . . 172 No. 591 Direct Remuneration of Executive Directors and Their Alternates . . . . . . . . . . . . . . . . . . . . 172 No. 592 2008 Regular Election of Executive Directors 173 No. 593 Allocation of $115 Million of FY08 Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Resolutions Adopted by the Board of Governors of the Bank at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . 174 No. 594 Financial Statements, Accountants' Report, and Administrative Budget . . . . . . . . . . . . . . . 174 No. 595 Allocation of FY08 Net Income . . . . . . . . . . . 174 Resolution Adopted by the Board of Governors of IFC between the 2007 and 2008 Annual Meetings . . . . . . . . . 175 No. 247 Membership of the State of Qatar . . . . . . . . . 175 vi 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page vii Page Resolution Adopted by the Board of Governors of IFC at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . 177 No. 248 Financial Statements, Accountants' Report, Administrative Budget, and Designations of Retained Earnings . . . . . . . . . . . . . . . . . . . . 177 Resolutions Adopted by the Board of Governors of IDA between the 2007 and 2008 Annual Meetings . . . . . . . . . 178 No. 217 Latvia--Change in Membership Status . . . . . 178 No. 218 Membership of the Republic of Lithuania . . 179 No. 219 Additions to Resources: Fifteenth Replenishment . . . . . . . . . . . . . . . . . . . . . . . . . 182 Resolution Adopted by the Board of Governors of IDA at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . 196 No. 220 Financial Statements, Accountants' Report, and Administrative Budget . . . . . . . . . . . . . . . 196 Resolution Adopted by the Council of Governors of MIGA between the 2007 and 2008 Annual Meetings . . . . . . . . . 197 No. 80 Election of Directors . . . . . . . . . . . . . . . . . . . . . 197 Resolution Adopted by the Council of Governors of MIGA at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . 198 No. 81 Financial Statements and the Report of the Independent Accountants . . . . . . . . . . . . . . . . . 198 Reports of the Executive Directors of the Bank . . . . . . . . . 199 Transfer from Surplus to Replenish the Trust Fund for Gaza and West Bank . . . . . . . . . . . . . . . . . . . . . . . 199 Transfer of IBRD Surplus to Food Price Crisis Response Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Report of the Boards of Governors of the Bank and the Fund by the Joint Committee on the Remuneration of Executive Directors and their Alternates . . . . . . . 202 2008 Regular Election of Executive Directors . . . . . . . 211 Rules for the 2008 Regular Election of Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Statement of Results of 2008 Election of Executive Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Allocation of FY08 Net Income . . . . . . . . . . . . . . . . . . . 224 vii 6135-CH00_FM_pi-viii.pdf 4/1/09 12:12 PM Page viii Page Reports of the Board of Directors of IDA Latvia--Change in Membership Status . . . . . . . . . . . . . 225 Membership of the Republic of Lithuania . . . . . . . . . . . 226 Additions to Resources: Fifteenth Replenishment . . . . 227 Report of the Board of Directors of IFC . . . . . . . . . . . . . . . 285 Report of the Board of Directors of MIGA 2008 Regular Election of Directors . . . . . . . . . . . . . . . . 286 Rules for the 2008 Regular Election of Directors . . . . 289 Statement of Results of 2008 Election of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292 Accredited Members of Delegations at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 Accredited Members of Delegations (MIGA) at the 2008 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 Observers at the 2008 Annual Meetings . . . . . . . . . . . . . . . . 339 Executive Directors and Alternates, IBRD, IFC, IDA . . . . . 345 Directors and Alternates, MIGA . . . . . . . . . . . . . . . . . . . . . . 347 Officers of the Boards of Governors and Joint Procedures Committee for 2008­09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Officers of the MIGA Council of Governors and Procedures Committee for 2008­09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 viii 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 1 OPENING ADDRESS BY THE CHAIRMAN THE HONORABLE ZORAN STAVRESKI GOVERNOR OF THE BANK AND THE FUND FOR FORMER YUGOSLAV REPUBLIC OF MACEDONIA Introductory Remarks Allow me to welcome you all to the 2008 Annual Meetings of the International Monetary Fund and the World Bank Group. It is a great honor for my country, Macedonia, to chair these meetings. At a time of unprecedented challenge and change in the global econ- omy, it is reassuring that the Bretton Woods Institutions have at their helms leaders with outstanding experience and energy. I know that fel- low Governors will join me in thanking Mr. Strauss-Kahn and Mr. Zoel- lick for their wise leadership in addressing immediate and longstanding global challenges through enhanced external engagement and compre- hensive internal refocusing. Looking forward, I have full confidence that they will continue these important efforts and remain vigilant toward new risks. Governors will also wish to thank Mr. Carstens for his able chairmanship of the Development Committee, and Mr. Padoa-Schioppa for chairing the IMFC, as well as to congratulate Mr. Youssef Boutros- Ghali on his selection as the new IMFC Chairman. Global Market Turmoil: New Challenges Call for Timely and Flexible Responses Fellow Governors, events of the past year starkly reminded us of the wide range of pressing challenges facing the global economy.We are cur- rently in the midst of one of the most serious global financial market crises of our time.This financial turmoil, along with the surging food and fuel prices that we have been seeing this year, has forced rapid and flexi- ble reactions from policymakers. At the same time, other challenges-- such as climate change, aid effectiveness, and governance of the Bretton Woods Institutions--remain imperative and demand action. It is vital that we harness the comparative advantage of both the Fund and the Bank Group to tackle immediate threats quickly, while continuing efforts to address ongoing challenges. The Bretton Woods Institutions are well placed to work with member countries and other international and regional institutions to cushion the impact of finan- cial turbulence so as to prevent a further expansion of the crisis. There is also urgent need to improve food security by going beyond an imme- diate emergency response. Yet, the unparalleled scale and complexity 1 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 2 of the challenges we confront today require that global institutions, like the Fund and the Bank Group, devise fast and flexible policy responses so that gains made over the past decade in macroeconomic stability and overcoming poverty are not reversed. Advancing Surveillance Issues Fund surveillance is a valuable tool in our efforts to promote macroeconomic and financial stability, but--to remain effective-- surveillance needs to be continually updated and enhanced to address new challenges. The Fund's first ever Statement of Surveillance Priori- ties highlights the key elements of the global macroeconomic changes that surveillance needs to address. In particular, it correctly recognizes the increased potential for disruptive financial sector spillovers into the real economy, and the pace with which adverse macroeconomic impacts spread. To address these developments, the Fund intends to strengthen its analysis of macro-financial linkages, and extend Early Warning Indicators to advanced economies. This updating builds on other efforts to make surveillance more rel- evant to changing global macroeconomic dynamics. Governors will recall the refocusing of exchange rate surveillance through the 2007 Surveillance Decision. Steps are now being taken to strengthen obser- vance of the decision, and to improve the underpinning methodological framework. Looking forward, the Fund must build on this progress-- and the findings of the Triennial Surveillance Review--and continue to adapt surveillance in line with the changing global economy. Strengthening Fund-FSF Collaboration Ensuring the greatest possible impact of Fund surveillance is also of vital importance. In this regard, we commend steps to strengthen col- laboration between the Fund and the Financial Stability Forum. The Fund's lead role in macro-financial surveillance and its near universal membership complements the Financial Stability Forum's role in bring- ing together policymakers of the most systemically important financial centers, international institutions, and standard setting bodies. Reviewing the Fund and the Bank Group's Lending and Policy Advice Roles In recent years, positive developments in the global economy and strengthened domestic policy frameworks have contributed to dimin- ishing requests for Fund lending. In the current pressing circumstances, however, the Fund needs to stand ready to provide fast, timely, and 2 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 3 flexible financial assistance to its members. In this respect, we are encouraged by the Managing Director's request that the Fund's Board activate its fast-track loan procedure. We are also encouraged by the determination of the Fund to continue adapting its lending instruments to changing circumstances. We welcome the innovative instruments being put in place, including the revamped Exogenous Shock Facility, which will provide faster assistance and in larger amounts to members experiencing a shock, as well as the consideration of a new liquidity instrument for crisis prevention. In this context, the recent review of the Fund's financing role in member countries, which found that Fund facilities have been used flexibly and have provided the needed sup- port to the membership, is noteworthy. Last year, the World Bank Group saw a record replenishment of $41.7 billion to IDA-15, jumpstarted by a $3.5 billion contribution from the Bank Group's own income. This is an important vote of confidence from the donor community in the Bank Group's work. We are further encouraged by the Bank Group's efforts this year to develop innova- tive financing instruments and to expand options for its clients. In par- ticular, we welcome the simplification and reduction in IBRD loan charges, the extension in maturity limits, and the initiatives to expand local currency financing and to develop local bond markets. We are also pleased to note the World Bank Group's strong capital- ization and prudent risk management policies that have kept it strong, allowing it to expand finance in response to client demand. In the cur- rent environment, the Bank Group's role as a lender cannot be underes- timated. We are also encouraged that the Bank has a team of highly experienced financial experts to help assist member countries strengthen crisis preparedness and to respond promptly to crises when they happen. Financial support is only one aspect of the Fund's and the Bank Group's assistance to member countries. Policy advice is increasingly requested by governments as they face a more testing external environ- ment and manage growing and complex economies. In this respect, the Fund is playing its part, helping countries assess the macroeconomic impacts of the food and fuel crisis, design targeted measures to alleviate its effects, and calculate the fiscal costs of the necessary policy responses. The Bank Group has already played an active role with the launch of a New Deal for Global Food Policy, which focuses--among other initiatives--on providing support to the World Food Program to facilitate food access to the poor, increasing investment in agricultural research, and acting to remove export bans and to reduce distorting subsidies and trade barriers. The Bank Group has established a $1.2 bil- lion Global Food Crisis Response Program, which provides the overall framework for a comprehensive and rapid response. We urge the Bank to continue its engagement on this matter and provide policy advice and 3 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 4 financing to the neediest countries in coordination with donors, stake- holders, and civil society. Regional Developments Fellow Governors, while downside risks to the global economy and their impact on the Western Balkans cannot be underestimated, our region is better positioned than ever before to absorb these shocks. After a decade of reforms, rapid growth and stronger domestic institu- tions bode well for a progressive integration of the Western Balkan countries into the European Union. The Fund and the World Bank Group have been valuable partners in this respect. The World Bank Group's lending and advisory services are increasingly supporting activities in improving investment climate and infrastructure, in partic- ular by developing power and transport networks that will ensure reli- able energy supply and facilitate regional trade. In addition, several projects dealing with climate change and disaster-risk mitigation are also underway. I call on the governments of Western Balkans countries to work together to ensure the success of these efforts. In line with the region, Macedonia has made considerable progress in recent years. Growth increased rapidly in the last two years, macro- economic stability was secured, and a range of important reforms were undertaken.The government program "Rebirth in 100 steps" includes a multi-sectoral approach encompassing sound economic and regulatory policies to improve the investment climate, strengthen the labor mar- ket, promote high-quality education and training systems, and create an efficient social safety net. Macedonia's progress in the World Bank Group's Doing Business rankings reflects the improvements achieved so far in the business climate thanks to bold regulatory reforms. A number of efforts to modernize and improve the infrastructure are also ongoing, but major additional investments in infrastructure remain crit- ical for future growth prospects. Macedonia's overarching goal is to complete the EU accession process and to achieve rapid convergence with EU member states' income levels in a fiscally, socially, and envi- ronmentally sustainable fashion. The Bank Group and Fund have been Macedonia's trusted and reliable advisors in its successful transition, and we look forward to a continued effective partnership. Ongoing Core Challenges My fellow Governors, helping member countries respond to press- ing short-term threats should not divert the Fund and the World Bank Group from confronting other ongoing core challenges. Addressing 4 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 5 these core challenges will strengthen legitimacy and enhance effective- ness, thus increasing the chances of successfully tackling short-term threats. Strategic Framework on Climate Change The World Bank Group has rightly supported developing countries' efforts to integrate climate change considerations into their core devel- opment strategies while maintaining economic growth. The current dis- cussion of the Strategic Framework on Climate Change and Develop- ment is testament to that challenge, and will allow the Bank Group to scale up plans going forward and further foster international collabora- tion on this important global public good. The World Bank Group has a catalytic role to play in helping to mobilize private sector funding, and in complementing existing and new financing mechanisms. The new financing instrument established via the Climate Investment Funds is a step in the right direction. Aid Effectiveness:Accra Agenda for Action Scaling-up of aid to low-income countries is another pressing chal- lenge. Despite the welcome endorsement of the Accra Agenda for Action (AAA), more can be done to increase aid effectiveness. I urge all development partners to keep moving the agenda forward. In par- ticular, I encourage donors to continue efforts to share good practices, harmonize monitoring systems, and scale-up capacity building efforts. Enhancing Voice and Participation of Developing and Transition Economies The Fund and the World Bank Group are pragmatic institutions and must adapt to a changing international environment. It is critical to ensure fair representation of all members and adequate participation of low-income countries in the governance of both institutions. In April 2008, the Fund approved a forward-looking package of governance reforms that increases the representation of dynamic economies and strengthens the voice of low-income countries. I call on you--fellow Governors--to show leadership in speeding up domestic approval of this reform. Keeping in mind the distinct nature of its development mandate, the ongoing efforts to explore concrete options on voice and participation within the Bank Group are also a step toward enhancing the legitimacy, credibility, and accountability of its operations.We urge the Bank to reach a consensus on a comprehensive package of reforms as soon as possible. 5 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 6 But more remains to be done. I thus welcome the establishment of a joint steering committee of Executive Directors and Fund Manage- ment and the appointment by the Managing Director of a Committee of Eminent Persons, chaired by Trevor Manuel, to assess the adequacy of the Fund's current decision-making framework. I also welcome the work underway at the World Bank Group in the area of internal gover- nance; including the recent announcement by the President of a High Level Commission, led by Ernesto Zedillo. Closing Remarks Fellow Governors, this has been a tumultuous year; unprecedented in many ways. The global economy is grappling with an acute financial crisis and a surge in commodities prices, which are undermining confi- dence in a globalized financial system and the open trading system.The challenges of globalization are stark, the threat is a retreat to protec- tionism, and solutions are not simple. At times of distress, however, great opportunities arise. We need to seize them through a more effec- tive Fund and World Bank Group, and a strong commitment by mem- ber countries to pursue difficult economic and political reforms. For the world to successfully rise to this challenge, bold statements need to be followed by even bolder actions. With these remarks, I hereby declare open the 2008 Annual Meetings of the International Monetary Fund and the World Bank Group. 6 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 7 OPENING ADDRESS BY ROBERT B. ZOELLICK THE PRESIDENT OF THE WORLD BANK GROUP Modernizing Multilateralism and Markets Thank you for joining us at these Annual Meetings. I want to express my particular thanks to our Chairman, Zoran Stavreski, and, once again, to Agustín Carstens for his leadership of the Development Committee and his partnership as a friend. I cannot imagine a better Chair to work with during my first year. I also want to single out my good colleague, Dominique Strauss Kahn. We work closely together, and I am fortunate to have a partner with such experience, insight, and fine humor. We meet at an extraordinarily difficult time--a time of uncertainty and insecurity, with a danger that those fears push us away from--not towards--a more inclusive and sustainable globalization. Recent weeks have made 2008 a precarious year--a meltdown in financial, credit, and housing markets. The continuing stress of high food, fuel, and commodity prices.Anxieties about the global economy. People are hurting. Families are worried about what coming days will bring. People are reacting with a sense first of confusion, then frustration, anger, and fear. These are natural responses, just as we have seen in developed coun- tries. The challenges of psychology will spread around the world as the financial and economic effects spread.We need to take them seriously. October could be a tipping point for many developing countries. A drop in exports, as well as capital inflow, will trigger a falloff in invest- ments. Deceleration of growth and deteriorating financing conditions will trigger business failures and increase the risk of banking emergen- cies. Some countries will slip toward balance of payments crises. As is always the case, the most poor are the most defenseless. The events of this year are a wake up call. There are storm clouds over multilateralism and markets. As food prices soared, agricultural markets started to break down under political pressures. Some 40 countries imposed bans or restric- tions on exports of food. Others imposed price controls and halted trading. The UN strained mightily to get countries to double their con- tributions to food assistance for those most in need. Poverty, hunger, and malnutrition increased. As the global system for agriculture ran aground, the World Trade Organization drifted into dangerous waters. The Doha Round has hit the rocks. 7 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 8 The Climate Change negotiations organized under the UN Frame- work Convention on Climate Change faces an uphill struggle, now steepened by the breakdown in the WTO. While needs are growing, the international aid system is not keep- ing pace. Donors bring ideas, energy, and resources, but they also can over- whelm national ownership by developing countries, harming the effec- tiveness of aid. In 2006, there were more than 70,000 aid transactions with an average project size of only $1.7 million. Last year, the average developing country hosted 260 donor visits.Vietnam had 752. National governments are drawn increasingly to provide aid with their flag, not through multilateralism that encourages coherence and building local ownership. The G-7 as a whole is far behind its Glen- eagles' commitments to boost development assistance. Private financial markets and businesses will continue to be the strongest drivers of global growth and development. But the developed world's financial systems, especially in the United States, have revealed glaring weaknesses after suffering titanic losses. The international architecture designed to deal with such circum- stances is creaking. A New Multilateralism Even as the United States and the world dig out of the present hole, we need to look further ahead:We must modernize multilateralism and markets for a New Global Economy. Some say today's crisis should take all our energy and focus. But the architects of Bretton Woods in 1944 laid the foundations for the future even as they still fought the armies of the past. For us, tomorrow is already here. New economic powers are on the rise. The engagement of rising powers with the global economy has made them "stakeholders" in the global system that benefited them. These rising powers want to be heard. They want to know what will be their role in making new rules for the global economy. The developed economy "stakeholders," in turn, both benefit from-- and are threatened by--the changes. Rising developing economies offer multiple poles of growth that assist their recoveries and offer new possi- bilities, but they also serve as fodder for scaremongers. With growth rates averaging about 6.6 percent between 1997 and 2007, some 25 countries in sub-Saharan Africa, with almost two-thirds of the region's population, offer a vision of yet another pole of growth that might be developed over the coming decades.This could be a great achievement, not only for overcoming poverty and for development, but also freeing untapped talents and energies. 8 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 9 But it will be an achievement left unrealized unless we have the vision and the courage to stand up to the challenges of economic isola- tionism, and to offer the leadership to help make it happen. We need a new approach. At its best, multilateralism is a means for solving problems among countries, with the group at the table willing and able to take construc- tive action together. When multilateralism is dysfunctional, globaliza- tion can be a Tower of Babel, with competing national interests collid- ing to the benefit of none. The Bretton Woods generation left two legacies: first, specific inter- national institutions and regimes--in various states of service and repair. Second, and more important, that generation left an intellectual, policy, and political commitment to act multilaterally to turn the prob- lems of an era into opportunities. The New Multilateralism, suiting our times, is likely to be a flexible network, not a fixed system. It needs to maximize the strengths of interconnecting actors, public and private, profit-making and civil soci- ety NGOs. The New Multilateralism must respect state sovereignties while solving interconnected problems that transcend borders. This New Multilateral Network needs to be pragmatic. Its baseline work is to foster cooperation by encouraging exchanges of perspectives on interests, both domestic and international. Often just sharing infor- mation is a start. We should encourage a search for mutual interests. Sometimes mutual interests can be fostered with incentives--and international institutions can become catalysts for action. Practical problem-solving builds a culture of cooperation. Our New Multilateralism must build toward a sense of shared responsibility for the health and effective functioning of the global political economy. This means--chiefly and critically--that it must involve those with a major stake in that economy, those willing to share in the responsibilities along with the benefits of maintaining it. We must redefine economic multilateralism beyond the traditional focus on finance and trade. Today, energy, climate change, and stabiliz- ing fragile and post-conflict states are economic issues. They are already part of the international security and environmental dialogue. They must be the concern of economic multilateralism as well. Priorities A New Steering Group The New Multilateralism will still depend principally on national leadership and cooperation. Countries matter. 9 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 10 We need a core group of Finance Ministers who will assume respon- sibility for anticipating issues, sharing information and insights, explor- ing mutual interests, mobilizing efforts to solve problems, and at least managing differences. For financial and economic cooperation, we should consider a new Steering Group including Brazil, China, India, Mexico, Russia, Saudi Arabia, South Africa, and the current G-7. Such a Steering Group would bring together over 70 percent of the World's GDP, 62 percent of its energy production, the major carbon emitters, the principal development donors, large regional actors, and the primary players in global capital, commodity, and exchange rate markets. But this Steering Group would not be a G-14. We will not make a new world simply by remaking the old. It should be numberless, flexi- ble, and over time, it could evolve. Others may be added, especially if their rising influence is matched by a willingness to help shoulder responsibilities. This new Steering Group should meet and videoconference regu- larly to foster a sense of group responsibility. The IMF and World Bank Group, perhaps with the WTO, can help support this Steering Group. We can identify emerging problems, sup- ply analysis, suggest solutions, and draw on our own broader member- ship to propose coalitions to address issues. The Steering Group members will still need to work through estab- lished international institutions and regimes that include other states. But the core group would increase the likelihood that countries draw together to address problems that are larger than any one state. We need this mechanism so that countries are not left to fail--with all the human, economic, and political consequences this entails for both them and their neighbors. We need it so that global problems are not just mopped up after the fact, but anticipated. We need it to develop the habit of dialogue and the necessary relationships of trust before the crisis hits.We need it to shape multilateral solutions. International Finance and Development We have seen the dark side of global connectedness. We need to navigate toward the light. The first task will be to overhaul the failed system of financial regu- lation and supervision. We must ask why so many thoroughly regulated and supervised institutions got into trouble. Any risk-based model, no matter how sophisticated and well supervised, depends critically on the assump- tions.What happens when the assumptions fail? 10 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 11 The changing conditions that trigger failure will increasingly be dependent on shifts in the world economy. Just as the crisis has been international because of interconnectedness, the reforms will need to be multilateral. The Financial Stability Forum (FSF), ably chaired by Mario Draghi of the Bank of Italy, has started to tackle these issues. Whether through an expanded FSF, a stronger FSF-IMF linkage, or the Steering Group, these financial supervisory issues will need to be addressed in a broader multilateral context. We must bolster an IMF early warning system for the global econ- omy, focused on crisis prevention and not just crisis resolution. The financial shock waves in the United States and Europe will reverberate in the global economy. The stark reality is that developing countries must anticipate and prepare for a drop in trade, remittances, and domestic investment. Countries with sound fiscal and balance of payments positions should be encouraged to spur domestic demand through consumption and investment. But others have yawning budget gaps, risky current account deficits, balance of payments problems, financial danger, or all four.The Fund and the Development Banks will need to assist. The New Multilateralism must put global development on a par with international finance. Economic multi-polarity offers stability and opportunity, just like a diversified portfolio of investments. But to boost more inclusive and sustainable growth, we need to think about aid differently. Two weeks ago at the United Nations, international partners raised $16 billion for development projects. This money is vital, and we need more if we are to meet the Millennium Development Goals. But we also must broaden our approach. We must listen to the growing number of Africans who are telling us they want markets and opportunities, not aid dependency. Private capital and markets will remain the drivers of growth. We must look beyond projects and programs to new ways of doing the business of development. At the Bank Group, we are changing our role from that of primarily a lender to a provider of customized financial and development solu- tions for overcoming poverty and spurring growth. We are also building an IFC investment platform to help intermedi- ate equity investment--not aid--from Sovereign Wealth Funds to Africa and other poor regions with growth opportunities. This is the "One Percent Solution" I proposed this spring. Private capital--and especially equity--will be the critical factor in building infrastructure, supplying energy, financing businesses and trade, and fostering regional integration within an open global economy. 11 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 12 And it is already happening. In 2008, IFC provided more investment (including syndications) to our clients than our IBRD lending or IDA assistance. Over 40 percent of IFC's investments were in IDA countries this year. Our Global Emerging Markets Local Currency Bond program, or GEMLOC, aims to catalyze the development of local currency bond markets in emerging market countries and facilitate south-south investment opportunities. We are helping our clients--from small farmers to governments-- manage development risks through insurance facilities for weather and catastrophic events. In partnership with DFID, we finalized a weather risk management transaction on behalf of Malawi. Under this transac- tion Malawi will receive up to $5 million if an index linked to rainfall drops significantly below the historical average. We are developing our business with sub-sovereign entities so we can get at the roots of local poverty and strengthening governance and performance at all levels. We are using our balance sheet and financing capabilities in combi- nation with donors to broaden types of assistance: from the issuance of vaccine bonds in the Japanese retail market, to advance commitments to purchase yet-to-be-developed pharmaceuticals to save lives. As we move into new fields with new instruments, we need to become better partners. To that end, we are ramping up our work to support health systems, promoting innovations such as results-based financing, and new ways of working with the private sector and civil society. Two weeks ago, at the UN's Millennium Summit, we joined with the UN, governments, non-traditional donors, the private sector, and civil society to boost support for malaria and for primary educa- tion with an additional Bank contribution of $2.6 billion. The New Multilateralism also needs mechanisms to move much more quickly to help those who are most vulnerable in crisis. Right after suggesting the idea at our Spring Meetings, as the food crisis hit hard, the World Bank created a new $1.2 billion rapid financing facility for those endangered by high food prices--to fund nutrition, school feeding, seeds and fertilizers, and other safety nets.We are now expand- ing that Facility to cover those hit by rising fuel prices. These kinds of vulnerability mechanisms must be flexible, fast, and will need a regular flow of grant funding. The World Bank Group must also adapt more quickly to meet new needs of its clients and interests of its shareholders. We need to better align our governance with the realities of the 21st century. Yesterday, we reached agreement on an initial reform package on Voice, Partici- 12 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 13 pation, and Responsibility.This is a start, but we will need to go further. Our Board has advanced work on internal governance. I am delighted that Ernest Zedillo has agreed to chair a High Level Commission, to consider a modernization in World Bank Group gover- nance so we can operate more dynamically, effectively, efficiently, and legitimately in a transformed global political economy. I have asked Ernesto to work with colleagues looking at the IMF. In 1944 the archi- tects of the Bretton Woods system seized a moment to build for a changed future.We must be no less ambitious today. The WTO and the Global Trading System The Doha global trade negotiations in the WTO are gasping on life support. It is vital that the WTO and an open global trading system not be buried with them. Trade negotiations will continue elsewhere. Recent research has shown how FTA negotiations can support broader opening of markets. But FTAs and preferential arrangements that are not broad-based could weaken global liberalization. They need to be linked to global disciplines.And the multilateral system remains the only option for lift- ing the heavy hand of trade-distorting support for agriculture, still run- ning at some $260 billion per year in OECD countries. One option to continue fostering global liberalization is to recog- nize trade facilitation as part of a development plan. There are oppor- tunities to cut costs of trade far in excess of those imposed by tariffs and other trade barriers. The World Bank's "Doing Business" trading and "Logistics" indicators have done the diagnostic groundwork. Regional bodies such as APEC have pointed the way. The World Bank Group is helping countries to simplify and harmo- nize procedures and documentation across a supply chain. We are cur- rently working on a Trade Facilitation Facility to provide technical assistance, capacity building, and project preparation. We can support both country-level projects that respond to client needs and multi- country projects that can facilitate regional trade integration. And we can help with the implementation of trade facilitation commitments associated with multilateral and regional trade agreements. A new trade facilitation and development agenda puts the self- interest of lowering costs of trading to work for a multilateral interest of encouraging more integration, efficiencies, and opportunities-- meaning more growth, more jobs, less poverty. This is multilateralism by practical steps, moving ahead where it is possible to do so. 13 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 14 Energy and Climate Change The New Multilateral Network must also interconnect energy and climate change. World energy markets are a mess. Producers, fearful of collapsing prices, are wary of new investments. Consuming countries want lower prices for consumers, but prices high enough to encourage conservation, efficiencies, alternative supplies, and new technologies.And the most vul- nerable countries and people are victimized by the whole confusion--hit by high prices, price volatility, and climate change. Most oil production is now controlled by national oil companies. These suppliers do not respond to market signals in the same way as private producers. We need a "global bargain" among major producers and consumers of energy. A few years ago, China suggested that the major energy con- sumers organize to deal more effectively with the producers' cartel. This is an idea worth considering, though with a broader purpose. At a minimum, such a bargain should involve sharing plans for expanding supplies, including alternative energy; improving efficiency and lessening demand; assisting with energy for the poor; and considering how these policies relate to carbon production and climate change poli- cies. The World Bank Group can play an important role here. Last year, our funding for renewable energy and energy efficiency projects in devel- oping countries grew by over eighty percent to reach US$2.7 billion. Part of the bargain will also be to provide an opportunity for devel- oping countries to make longer-term investments to reduce vulnerabil- ity to high and volatile fuel prices while supporting the poor with safety nets.With less than one quarter of Sub-Saharan Africans currently hav- ing access to electricity, improving access for the poorest is a critical complement to clean energy investments. Just as we are assisting those most vulnerable to high food prices by expanding agricultural produc- tion, we need to help those vulnerable to high and volatile energy prices by improving efficiencies, options for alternative supplies and off-grid technologies, and regional cooperation. At the request of shareholders, the World Bank Group is developing an "Energy for the Poor" initiative to help the poorest countries meet energy needs in effi- cient and sustainable ways. We might consider taking the global bargain further. There might be a common interest in managing a price range that reconciles inter- ests while transitioning toward lower carbon growth strategies, a broader portfolio of supplies, and greater international security. Multilateral understandings about energy futures--leading to clear pricing for carbon--might also be vital for the United Nations Frame- work Convention on Climate Change. 14 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 15 A climate change accord also will have to be supported by new mechanisms to support forestation and avoid deforestation, develop new technologies and encourage their rapid diffusion, provide finan- cial support to poorer countries, and assist with adaptation. As we discussed at the Bali Breakfast yesterday, we need to strengthen car- bon markets. The World Bank Group's launch of two new facilities-- the Forest Carbon Partnership Facility and the Carbon Partnership Facility--enables us to support clients seeking lower carbon devel- opment paths. Two weeks ago, to help provide additional resources for these chal- lenges, the Bank hosted a pledging session that raised $6.1 billion from ten countries for new Climate Investment Funds--resources which developing countries can use to address climate change issues within their own development and anti-poverty strategies. Fragile States: Securing Development Nowhere is the New Multilateral Network needed more than in the fragile and post-conflict states where the "Bottom Billion" live. Too often, the development community has treated states affected by fragility and conflict simply as harder cases of development. Yet these situations require looking beyond the analytics of development to a different framework of building security, legitimacy, governance, and the economy. This is not security as usual, or development as usual. Securing Development is about bringing security and development together first to smooth the transition from conflict to peace and then to embed stability so that development can take hold over a decade and beyond. Only by securing development can we put down roots deep enough to break the cycle of fragility and violence. Our appreciation of how best to secure development--to synthesize security, governance, and economics to be most effective--is still mod- est.We face critical gaps in international capabilities. Ultimately, the most important element in fragile or post-conflict states is the people of those countries. But it will take much stronger and longer-lasting multilateral assistance to help these people shift from being victims to becoming the principal agents of recovery. At the World Bank, we are devising new, and I hope improved, part- nerships with the United Nations and others. A new UN-World Bank Fiduciary Principles Accord will significantly speed up joint responses to crises. We are pushing ahead with desperately needed arrears clear- ance operations, and establishing a new $100 million State- and Peace- Building Fund to support a more strategic and innovative approach to conflict and fragility. 15 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 16 The Six Strategic Themes Last year I outlined six strategic themes for the World Bank Group to help guide our work--for the poorest countries, especially Africa; fragile and post-conflict states; middle-income countries; global and regional public goods; expanding opportunity for the Arab World; and building knowledge and learning. These strategic themes run throughout our work. I have highlighted a few examples today. As we move forward with the six themes, we must continue to mainstream anti-corruption and good governance across all our activi- ties. Publics are right to expect a sharper focus on governance and anti- corruption. Corruption is a cruel tax--first and foremost on the poor. We must fight it wherever we find it. I am grateful to Paul Volcker and his fellow Commissioners for their excellent work--and practical recommendations. We are implementing the panel's recommendations and scaling-up our work-- including by strengthening our Institutional Integrity Department, creating a new preventative and advisory unit to better share and implement lessons learned, and appointing an International Advisory Board to help advise our new Vice President. This work is based on our fiduciary obligations. But it does not end there. We must build an institutional culture of honesty, integrity, and trust. And we must encourage and assist our clients--from the youngest procurement officer to Prime Ministers and Presidents--to embrace this culture, too. Conclusion As one executive director recently observed, since our last Annual Meetings a year ago, the World Bank Group has moved from crisis to catalyst. Now the world faces a crisis. It is a moment for the World Bank Group to step up. We have a sound capital base, strong liquidity, unmatched global experience with worldwide reach, and extraordinary people. Yet we can and must do better. The World Bank Group is at its best when it brings together global expertise, constantly challenged and updated; investments in people, markets, and institutions; and innovative financing--always conscious, as the Growth Commission emphasized this year, that there is no single template for development. Each country's circumstances are unique-- and special. We must have the humility, practicality, and honesty to learn what works--and to fix what doesn't. 16 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 17 In that endeavor, our greatest asset is the staff of the World Bank Group here in Washington and around the world, who have worked tirelessly this year with clients and partners to support these efforts. Drawing talent from over a hundred countries, we are striving to show how people with vastly different experiences and from different cul- tures can come together to make a whole far greater than the sum of its parts. I am fortunate indeed to gain from the richness of their diversity. I want to thank them and to let them know I am proud of them. We also have an active Board with which we work every day. It has offered invaluable guidance as we advance to meet the needs of our clients, for which I am grateful. In closing, a word of perspective: Unless we can better share the opportunities and the responsibilities in the new global economy; unless we can look beyond the financial res- cues to the human rescues; unless we can craft international policies that will help bring more peoples and more countries into the economic mainstream, we will not build an inclusive and sustainable globalization. And our world will not be stable--no matter how big our financial res- cue packages. Fate presents an opportunity wrapped in a necessity: To Modernize Multilateralism and Markets.We must seize it. 17 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 18 REPORT BY AGUSTÍN CARSTENS CHAIRMAN OF THE DEVELOPMENT COMMITTEE Thank you for this opportunity to share selected highlights of yes- terday's Development Committee discussion. A more comprehensive account of our work is available in our published Communiqué. At our meeting, we discussed three broad sets of issues that are of great importance to developing and transition countries. I am going to focus my remarks today on these same three topics. First, we spent most of our time discussing the current global situa- tion, including the turmoil in world financial markets, with a special focus on the implications for the developing and transition countries. Beyond the present crisis, we took some time to discuss two sets of issues that are of long-term significance. We discussed and agreed on an important set of reforms designed to enhance the "voice and repre- sentation" of developing and transition countries in the World Bank on this important matter. Finally, we discussed and endorsed a new Strategic Framework designed to provide a basis for wide-ranging engagement by the World Bank in helping member countries grapple with the critical challenges posed to them by Climate Change. So with that outline, let me share with you some of the main points of our discussions in these three areas. First, the current economic situation and the financial crisis. Our meeting took place at a critical time for the global economy, with finan- cial markets experiencing unprecedented turmoil. Developing and transition countries (DTCs)--many of them already hit hard by cur- rent high prices for energy and essential foodstuffs--risk very serious setbacks to their efforts to improve the lives of their populations from any prolonged tightening of credit or sustained global slowdown. The poorest and most vulnerable groups risk the most serious--and in some cases permanent--damage. Against this background, we endorsed the very important commit- ments made at the International Monetary and Financial Committee, relating to measures to address the financial sector crisis. Next, we stressed that aid volumes need to be consistent with existing commitments and we called for full compliance with these commitments. In support of these concerted actions, we called on the World Bank to join with the IMF in drawing on the full range of its resources-- finance, analysis and advice--to help developing and transition coun- tries strengthen their economies, maintain growth, and protect the most vulnerable groups against the impact of the current crises. 18 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 19 Under the strong and effective leadership of President Zoellick, the World Bank Group stands ready to help: ˇ The Bank recently announced a $1.2 billion rapid financing facility, which is providing immediate help for countries coping with the impact of high food prices on the poor. We urged countries to con- sider making contributions to this fund. ˇ We encouraged the Bank and its partners to move forward with a planned new program--Energy for the Poor--that would provide rapid support for countries' efforts to strengthen social safety nets to protect the poor against the impact of high fuel bills. ˇ We noted that IBRD has the financial capacity to comfortably double its annual lending to developing countries to meet additional demand from clients. IBRD lending was US$13.5 billion last fiscal year. ˇ We also urged IFC to explore options for helping recapitalize banks in developing countries adversely affected by the global liquidity cri- sis, including the possibility of a fund. Let me now turn to the second set of issues--our work on reform- ing the World Bank Group. When the Development Committee met this past April, we called for concrete reform options for the World Bank Group on these issues to be prepared in time for us to discuss them at these Annual Meetings. I am now very pleased to tell you that, based on intensive work undertaken by member countries and Bank management and staff over the past 6 months, we were in a position yesterday to review and advance a concrete package of reforms. First, an additional chair will be created for Sub Saharan Africa on the Bank's Board. Second, the voting shares of developing and transi- tion countries' in IBRD and IDA will increase, giving special emphasis to smaller members. Third, a realignment of Bank shareholding will be taken up by the Bank's Board in an important shareholding review that will work to an agreed timeline to develop principles, criteria and proposals for shareholding. The review will consider the evolving weight of members in the world economy and other Bank-specific cri- teria consistent with the WBG's development mandate, moving over time towards equitable voting power between developed and develop- ing members. Fourth, there is considerable agreement on the impor- tance of a selection process for the President of the Bank that is merit- based and transparent, with nominations open to all Board members and transparent Board consideration of all candidates. Recognizing the above package as an important first step in the ongoing process of comprehensive reform, we asked the Boards and Management to take prompt action to implement this first step. Third and finally, we discussed and welcomed a new strategic framework that has been developed for the World Bank Group in the 19 6135-CH01_p001-020.pdf 4/1/09 12:12 PM Page 20 field of Development and Climate Change. This framework provides a basis for the Bank Group to fulfill its core mission of promoting eco- nomic growth and poverty reduction, at the global, regional and coun- try levels, in the context of the challenges posed by climate change. We encouraged the Bank Group to customize its support for climate change adaptation and mitigation efforts to the needs of its different member countries. Given the enormous financial gap for addressing climate change, we also encouraged the Bank to strengthen its resource mobilization efforts in this field. Finally, we encouraged the Bank Group to play an active role in supporting the development and deployment of clean and climate-resilient technologies. 20 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 21 STATEMENTS BY GOVERNORS AND ALTERNATE GOVERNORS AFGHANISTAN: ANWAR UL-HAQ AHADY Governor of the Bank It is a great privilege to address this forum again. Despite deterioration in the security situation during the past year, the government of Afghanistan has continued to implement existing restructuring programs, and has launched new major development efforts. We submitted our Poverty Reduction Strategy Paper (PRSP) to the World Bank and the IMF boards in April of 2008. Jointly with the government of France, we convened the Afghanistan Support Confer- ence in Paris last June whereby donors generously pledged new contri- butions of over US$15 billion to help the implementation of our national development strategy. Our PRSP calls for US$50 billion investment in five years. We had about $14 billion in outstanding pledges, and I am quite confident that donors will pledge additional amounts during the next few years to help finance the implementation of our PRSP. We will submit our first year PRSP implementation report next April. Over two years ago, we started our Poverty Reduction and Growth Facility (PRGF) program with the IMF. We plan to complete the third year of our PRGF program in summer 2009, which is fundamental in achieving debt restructuring under the Heavily Indebted Poor Coun- tries (HIPC) program; and we have successfully implemented most of the PRGF recommendations for structural reform. Like in the previous years, last year we increased our revenues by 27 percent; this year we expect to increase our revenues by 32 percent. Despite increasing chal- lenges in the way of collecting revenues, I am happy to report that we just met our second quarter revenue target. However, like the rest of the world, Afghanistan has suffered from the drastic increase in the prices of food and oil. Between 2002 and 2007, inflation remained below 10 percent whereas last year it rose to over 20 percent. Increase in the food and fuel prices explains over 80 percent of the last year's inflation. Furthermore, this year's drought is projected to cause a decline of about 30 percent in the production of grain. Without major imports of grain, we anticipate major food short- ages. Thus, to remedy this situation, in addition to asking donors for food assistance and expecting the private sector to import a larger 21 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 22 amount of food, the government has allocated US$100 million to pur- chase grain from international markets. Last year, the economy grew by 11.5 percent; unfortunately, this year, due to the drought, we have lowered our expected growth rate to 7.5 percent. Even though we anticipate our structural reforms to enable the private sector to play a much more important role in eco- nomic growth in a few years' time, for now, donor assistance continues to be the largest contributor to economic growth. Of course, we are very grateful to our donors for helping us to rebuild our economy, but as I have said in the past, without addressing the issue of aid effective- ness, we are not likely to have impressive results. With better aid effec- tiveness, we believe we can have much higher growth rates. We are very pleased with the results of the High-Level Forum on Aid Effectiveness that was convened in Accra, Ghana, during the first week of September this year. We are thankful for donors agreeing to channel at least 50 percent of their assistance through the national budget by 2010. Cost-effectiveness, particularly in procurement, and genuine ownership of the developmental priorities by the recipients of aid are also very important factors in improving aid effectiveness. We are committed to mutual accountability, enhancing value for money, transparency, and predictability of aid, and we urge the World Bank Group to develop plans to implement the Accra Agenda for Action. Now that donors have agreed to channel a substantial amount of their resources through the national budget, I hope that we will also promote these other criti- cal aspects of aid effectiveness. Of course, the Bretton Woods institutions play an important role in the world economic affairs, especially in developing countries. The IMF's PRGF program in Afghanistan is a mechanism for market- oriented economic reform, which is expected to promote sustainable growth. We appreciate IDA's continued funding of some of our most essential development programs as well as rebuilding effective state institutions. Donors, including the World Bank, should support the gov- ernments of developing and post-conflict countries to develop greater capacity for responding to drastically changing external conditions. In this context, we commend President Zoellick in responding to rising global food prices. The Bank's Food Crisis Response Trust will help countries to increase food security over time; we indeed hope that the long-term solutions to food insecurity will receive greater attention. However, it is also necessary for countries like Afghanistan to receive immediate assistance to respond to the short-term crisis. We also wel- come the World Bank Group's collaboration with the UN High Level Task Force on Global Food Crisis. I also appreciate the discussion at the IMFC on Saturday on con- crete steps to restore financial stability and the smooth functioning of 22 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 23 credit markets. Developing countries could indeed suffer greatly from a long global slowdown. It will be therefore crucial to maintain focus on support for sustainable growth, poverty reduction, and the achieve- ment of the Millennium Development Goals (MDGs). We hope that the current financial crisis will not reduce the amount of assistance available for development. In this regard, we welcome the world lead- ers' renewed commitment to the MDGs at the recent United Nations (UN) High Level event. We also welcome the IMF's mobilization of the Poverty Reduction and Growth Facility (PRGF) in response to its members' needs, and the recent reform for easier and more rapid access to concessional assistance in response to external shocks. We also strongly support the World Bank's continued focus on access to renewable energy, a key requirement for developing countries to achieve economic growth and make progress towards the realization of the MDGs. As discussed yesterday in the Development Committee, we recognize the importance of supporting the low-income countries in adapting to the effects of climate change, but we hope that this effort will not mean redirecting financial resources from other important development priorities. Furthermore, there is an additional concern about the increasing cost of projects due to screening of climate change impact. In conclusion, despite the increased difficulties in our environment and the complexity of our problems, the government of Afghanistan has adhered to its economic reform agendas. Our developmental achievements are still impressive. We thank the IMF for advising us on establishing an economic system that will enhance sustainable growth and the World Bank for financing some of our essential developmental and effective state-building programs. Even though we face tremen- dous challenges, with your continued support, I am confident that we will overcome these problems. AUSTRALIA: WAYNE SWAN, M.P. Governor of the Fund and the Bank Global Financial Crisis We are facing a global crisis, which requires a global solution. Aus- tralia has been participating fully in the international response so far-- through our membership of bodies such as the IMF, the Financial Sta- bility Forum (FSF), and the Group of Twenty (G-20). Progress this weekend represents a significant step forward in the response to the challenges we all face. Australia is very supportive of efforts in the United States and else- where to manage immediate risks to financial stability and restore 23 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 24 market confidence, and of the US Treasury Blueprint for domestic financial regulatory reform. Our central bank is an active participant in cross-border initiatives to provide markets with liquidity. For its part, Australia's banking system remains resilient, with stable profits, good balance sheets and few nonperforming loans. Our strong prudential and macroeconomic frameworks have also enabled us to withstand the turmoil well so far. However, Australia's financial system is being affected by global events, in particular developments in international wholesale funding markets. As a preemptive move to guard against risks, we have decided to guarantee bank deposits for a period of three years and to guaran- tee, for a fee, wholesale term funding of banks and other authorized deposit-taking institutions to enable these institutions to continue to raise funds overseas in the current tight conditions. These steps are in line with action taken in other countries and with the Group of Seven (G-7) agreement on Friday that the current situa- tion calls for urgent and exceptional action to stabilize financial mar- kets and restore the flow of credit to support global economic growth. It is vital that the international community capture the lessons of the current global financial crisis and translate them into action. In the wake of the financial crises of the late 1990s, major players acknowl- edged the need to improve domestic regulation and strengthen the global financial architecture. Some useful things were done, but not enough. We support the FSF recommendations and are working within the FSF and international standard setting bodies to ensure their full implementation domestically and internationally. This is essential to improving standards of disclosure, transparency, and prudential regula- tion of financial markets, and to rebuilding longer-term confidence in the system. However, Australia believes the FSF recommendations should be enhanced by the inclusion of additional measures in support of conser- vative and consistent prudential standards that apply to all financial institutions of systemic importance. And we need to strengthen the global financial architecture through the existing forums of the IMF, the FSF, and the G-20. Australia has proposed a five-point plan. ˇ First, all systemically important financial institutions, not just com- mercial banks, should be licensed--with licensing subject to full dis- closure and analysis of on- and off-balance sheet exposures. ˇ This should be imbedded in globally agreed best practice standards of financial regulation whose implementation would be facilitated by the IMF and become an integrated part of the IMF's surveillance 24 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 25 activities. Central banks in each country would have responsibility for financial system stability. ˇ Second, counter-cyclical regulatory frameworks should ensure banks and other financial institutions build up capital in good times as a buffer for bad times, using predictable rules. ˇ Third, financial institutions need to have clear internal incentives to promote responsible behavior. There should be higher capital requirements for firms with remuneration arrangements that reward short-term returns or excessive risk taking. ˇ Fourth, supervisory systems must be more compatible with account- ing principles that reflect reasonable assessments of the value of assets over time, so that accounting rules foster a more medium-term perspective. ˇ And finally, the G-20 would strengthen its input into shaping the work of the IMF and FSF and the implementation of agreed out- comes. The IMF would have a stronger mandate for prudential analysis. And the IMF and FSF would develop their capabilities for early warning of impending institutional vulnerabilities and provide timely advice on remedial policies. Systemically important emerging market economies must have a role in strengthening the financial architecture. Indeed, while the epi- center of today's financial crisis is the major advanced economies, it is disrupting the flow of capital across the globe and therefore all system- ically important countries must be part of the solution. That is why Australia also sees a central role for the G-20--with its unique membership of systemically important countries--in providing political authority for reforms to the architecture. This will mean the G-20 placing financial stability at the centre of its work program. Under our proposals, the G-20 would monitor implementation of FSF recommendations, encourage their wide adoption, and engage on the risks facing the global financial system based on regular scenario analysis provided by the IMF and FSF. The communication of these risks must also be significantly improved by combining the IMF's World Economic Outlook and Global Financial Stability Report into a single, more concise, and better-targeted report that clearly identifies vulnerabilities and recommends policy responses in a form that demands attention by global policy makers. In addition, given their systemic importance, individual G-20 mem- bers would provide the IMF and FSF with better information on the stability of their domestic financial systems and cross-border exposures. These proposals would, I believe, build constructively on the work undertaken to date to try to prevent future crises. 25 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 26 Australia has been active in the IMF's work to strengthen its finan- cial sector surveillance and related policy advice, and ultimately its capacity to help prevent future crises. The IMFC has endorsed a strengthened IMF role in these areas, as part of the process of rebuild- ing the international financial architecture: ˇ The Fund will strengthen its early warning capabilities in relation to identifying and reporting on risks to global financial stability. ˇ The Fund will play a key facilitation, analytical and assessment role in helping build a more robust and coherent financial policy frame- work and advise members on policies to address the weaknesses revealed by the current financial turmoil. ˇ The Fund is strengthening its watchdog role in overseeing the imple- mentation of policy reforms. With its wide membership and mandate, the Fund is uniquely placed to tailor, monitor, and evaluate the implementation of policy recommendations through its bilateral and multilateral surveillance activities. To perform these roles effectively, the Fund will collaborate with the other multilateral forums to exploit complementarities and build international consensus. Australia has been a key supporter of these reforms and welcomes their adoption. We also fully support the use of the Fund's emergency procedures to make available substantial resources where necessary to help mem- ber countries cover financing needs, and the accelerated work on the possible establishment of a new IMF liquidity instrument. Development Challenges Many developing countries are likely to face a dual challenge: slower global growth and increased difficulty in accessing credit and investment, combined with inflationary pressures driven by high com- modity prices. The IMF and World Bank will need to work collaboratively and urgently to respond to these issues, recognizing their respective man- dates and comparative advantages. Countries must also continue to work together to meet shared chal- lenges and be engaged in discussions on global problems such as high food and energy prices and climate change. These problems will also require considered policy responses at the national level, with input and advice from organizations like the IMF and World Bank. Open trade and investment policies, including reduced subsidies and tariffs, can strengthen developing countries' economies, improving their resilience to respond to higher global food and fuel prices. Con- 26 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 27 cluding the Doha round is one of the most important collective steps the world can take now to boost global food supplies and improve long-term food security. I commend the World Bank for its efforts in helping break the cycle of food insecurity. Australia is committed to doing its share in the cur- rent fight against global food insecurity and was pleased to be able to commit A$50 million to the World Bank's multi-donor trust fund. Climate Change For a long-term effective solution to climate change, all countries-- both developed and developing--will need to be involved. Institutions such as the World Bank and the United Nations will also be required to work together to ease the challenges that climate change presents for developing countries, with the IMF also playing an important role in advising on macroeconomic impacts. The Australian Government is committed to tackling climate change and is pursuing policies on energy efficiency, low emissions technologies and domestic and international adaptation. Discussions at the Bali breakfast highlight the important role of market-based mecha- nisms in tackling climate change. The central element of Australia's cli- mate change policy framework is a national emissions trading scheme, the Carbon Pollution Reduction Scheme. Australia is also pleased to be able to support the UK as G-20 host in 2009, by co-hosting a G-20 cli- mate change workshop in February 2009. International financial institutions have an important role in com- plementing the work of the United Nations Framework Convention on Climate Change. The World Bank's Strategic Framework for Develop- ment and Climate Change presents a balanced approach for the World Bank in addressing climate change, while recognizing the core mandate of the Bank in supporting development outcomes in partner countries. Australia was pleased to be able to announce an Australian contribu- tion of A$150 million to the Climate Investment Funds. Governance Reforms Today's world is very different from the world when the IMF and World Bank were conceived and it is important that these changes are reflected in institutional arrangements. Australia strongly supports efforts by the Fund and Bank to pursue governance reforms. All mem- bers will benefit from a Fund and Bank that have greater legitimacy and relevance, and are therefore more effective in fulfilling their respective mandates for international financial stability and poverty reduction. 27 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 28 The proposed voice and participation reforms considered by the Development Committee represent a good step forward, following the substantial quota and voice reforms agreed at the Fund. The Bank reforms will see an increase in the votes of developing and transition countries and a third chair for Sub-Saharan Africa--providing opportu- nity for the region to strengthen its voice in decision making at the Bank. It will be important to build on this reform package to further strengthen the governance and policy framework of the Bank. Realign- ing voting interests in the Bank to reflect the increased economic weight of emerging economies will be fundamentally important to the long-term relevance of the Bank. Australia looks forward to working constructively with members on the challenging reforms that lie ahead. At the IMF, Australia thanks the Independent Evaluation Office (IEO) for their comprehensive Report on the Evaluation of Aspects of IMF Corporate Governance--including the role of the Executive Board and looks forward to further work on these issues, including through the agreed work plan of the Executive Board and the independent assess- ment of the Committee of IMF Governance Reform, chaired by South African Finance Minister Trevor Manuel. Australia will continue to engage on proposals to strengthen the roles and accountabilities of the IMF Board of Governors, IMFC, Executive Board, and Management. Sovereign Wealth Funds Australia welcomes efforts to accommodate the growth of sover- eign wealth funds, which are becoming increasingly important in global financial markets and have demonstrated that they can have a stabiliz- ing influence in these markets. We thank the IMF for their work in facilitating and coordinating the work of the International Working Group of sovereign wealth funds. We welcome the release of the Santiago Principles. If widely sub- scribed to, the Principles will build transparency and strengthen confi- dence in the independence and commerciality of sovereign wealth funds, supporting an open and stable international investment climate. IMF Refocusing and Budget Reform Finally, Australia would like to thank the IMF Managing Director for his work, supported by the Executive Board, in achieving significant refocusing of the Fund's work program on areas of comparative advan- tage, and budget reform involving substantial expenditure savings and the establishment of a new income model. These are difficult reforms not often seen in multilateral bodies and should not be underestimated. 28 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 29 Australia values its close working partnership with the Fund and Bank and we look forward to further ongoing productive dialogue with both institutions to promote global stability and sustainable development. BAHAMAS: HUBERT A. INGRAHAM Governor of the Fund and the Bank (on behalf of the Caribbean Community) As Governor for The Bahamas, I have been given the distinct honor to speak on behalf of the Caribbean Community (Caricom), namely, Antigua, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. We express our gratitude to the management and staff of the Fund and the Bank as well as the government of the United States of Amer- ica for the arrangements made for these meetings. These meetings are being held at a critical time. Global economic growth is being eroded by exorbitant increases in commodity prices gravely impacting the living standards of our people. The tremendous uncertainty in global financial markets is seriously threatening employ- ment levels in our countries, with further negative effects on the living standards of our people. The medium-term outlook for less developed countries and small island states, such as ours, appears especially challenging. However, we believe that these challenges can also present opportunities to us all if the appropriate international responses are effective. For our part, we intend to do all we can to implement policies and measures that will reposition our economies for early, resilient, sustain- able and strong growth to meet the aspirations of our peoples. Rise in Energy and Food Prices While we have been doing our best to overcome these difficulties, the sustained increases in energy and food prices have presented seri- ous macroeconomic, social, and human development challenges for small, open economies such as ours. Like others around the world, the governments of Caricom have been preoccupied with the accelerating rates of inflation fuelled by the unprecedented spikes in energy and food prices. Since food and fuel account for a large component of our consump- tion baskets, the impact of the price increases has been hugely damag- ing to the living standards of our people. 29 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 30 Moreover, the growing cost of energy is affecting the travel plans of many internationally, with direct negative consequences for tourism, a principal industry for most Caricom countries. The severity of the problem has compelled regional Governments to implement various support programs to mitigate the adverse effects on poor and vulnerable groups. These actions have placed additional burden on already strained fiscal accounts. Since the high prices are expected to persist over the medium-term, there is an elevated risk of social and economic dislocation. We have therefore intensified our efforts to formulate sustainable regional agri- cultural and energy policies. We hope that these will bolster our ability to absorb external shocks. Millennium Development Goals Despite the challenges facing the region, our countries remain firmly committed to achieving the Millennium Development Goals by the year 2015. However, we cannot accomplish these goals and main- tain these standards on our own. We look forward to and we welcome continued assistance from the Bretton Woods institutions and from our development partners. It is within this context that we wish to express our sincere appreciation to the President of the Bank for his invaluable efforts in overseeing a suc- cessful IDA-15 replenishment exercise. This concessional window has contributed significantly to the economic development of some of our member countries. We recognize IDA's eligibility criteria in terms of per capita GDP and that some of our members are surpassing these levels. But given the special circumstances of small island states, we urge the Bank to continue IDA support to the region. Climate Change We welcome the enhanced awareness and attention our developed country partners are paying to climate change. The recent G-7 meeting witnessed the adoption of a proposal by member countries to reduce green house gas emission by 50 percent by the year 2050. The persistent challenge of climate change, with its dire twin prognosis of sea level rise and stronger and more frequent hurricanes, is especially troubling for the Small Island Developing States (SIDS) of Caricom. Much of our land mass is within 1.5 meters of sea level and our most significant economic development has taken place in susceptible coastal zones. So we are very much aware of the impact of climate change on the productive sectors of our economies. 30 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 31 We have moved with urgency to effect numerous adaptation and mitigation strategies. We believe that our efforts, although small, will make a meaningful contribution to the global effort. The introduction of the Climate Investment Funds (CIF) is timely, and we congratulate the Multilateral Development Banks for their efforts in designing a financial mechanism to assist developing coun- tries in addressing climate change. Public Debt We cannot overemphasize the issue of public debt sustainability, which is a serious and growing concern in our region of primarily Mid- dle Income Countries (MIC). Too often, our ability to address social issues is hampered as a result of heavy debt servicing burdens. In the case of Jamaica, 54 cents out of each dollar collected in gov- ernment revenue goes to debt servicing. Similarly, our Eastern Caribbean States are challenged by rising debt. Consequent to the col- lapse of the Doha Round of trade talks, it is possible that these coun- tries could witness further deterioration of their debt positions and heightened social challenges. While we are indeed grateful for the assistance of the Bank in determining options for addressing this issue, we believe that our clas- sification as MIC countries limits the Bank's potential range of inter- ventions. We therefore recommend that the Bank review the status of small island states and their unique needs. Voice and Representation We note the options presented for discussion by the Bank to increase the level of Voice and Representation for Developing and Transitional Countries (DTCs). We consider reforms arising from dia- logue on this subject as salient to the effectiveness of the institution. Our hope in this regard is for an agreement on a roadmap that addresses in sequence, and in a timely manner, the options deemed necessary for significant enhancement to the Voice and Participation of developing countries in the World Bank Group. Caribbean Technical Assistance Centre Once again, we place on record our deep appreciation to the Bank, the Fund, and the Caribbean Regional Technical Assistance Centre (CARTAC) for their invaluable contributions to institutional and capacity building, and the improvement of economic management in the Caribbean. As we continue to implement the regional agenda and 31 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 32 strengthen our ability to respond effectively to challenges and to exploit opportunities, we will require well-coordinated assistance from the Bank, the Fund and international donors. Notwithstanding the planned budget cuts, the Caribbean needs to remain a focus of the work of the Fund. To avoid crises, it is important that the Fund invest not only in those countries that are systemically important but also in those that are vulnerable. Conclusion Finally, Mr. Chairman, we know that the institutions listen carefully and with understanding to the views that we have expressed at these meetings. We are sure that the institutions will respond urgently and positively to the needs that I have expressed today on behalf of the Caribbean Constituency, needs which are extremely urgent in the present unsettled global economic and financial environment. We wish both institutions every success in their future endeavors to fulfill their respective mandates. BANGLADESH: A.B. MIRZA MD. AZIZUL ISLAM Governor of the Fund and the Bank I feel privileged to have the opportunity to attend the 2008 Annual Meetings of the IMF and the World Bank at a very challenging time confronting the world economy. The financial market turmoil in some of the developed countries has the potential of exerting considerable negative impact on growth and poverty reduction in developing coun- tries. We hope the ongoing government interventions would help calm the volatile situation and restore stability and confidence in the market place. This year, we are also halfway through our quest to achieving the Millennium Development Goals (MDGs). It is high time for us to take stock of the progress we have made and evaluate our performance on the mutual accountability framework enunciated in the Monterrey Consensus for future course of effective action. According to current estimates while poverty will be halved on a global level by 2015, many countries are likely to miss this target by a wide margin. The MDGs relating to human development are unlikely to be met even at the global level. Climate change in conjunction with spikes in the prices of energy and food poses grave threats to the sus- tainability of development and to poverty reduction. The challenges ahead of us are, therefore, daunting. The core constraint in achieving progress in MDGs continues to be lack of adequate development 32 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 33 financing. We note with concern that real official development assis- tance from Development Assistance Committee (DAC) donors declined in 2006 and 2007. Many poor countries across regions have by now proved their ability to effectively absorb increased volume of aid. There is an urgent need now for the developed countries to fulfill their obligations to increase core development assistance to 0.7 percent of their gross national income. We must also renew our commitment to further improve pre- dictability and effectiveness of aid. We firmly believe that the Accra Agenda for Action provides an adequate blueprint to accelerate the progress we have made since the Paris Declaration. Strengthened donor harmonization and alignment with country systems are more critical now in view of the emergence of increasing number of donors and new aid modalities. We believe country ownership of the develop- ment agenda, use of country systems and a monitorable results frame- work will be critical for implementing the Accra Agenda for Action. The recent surge in prices of commodities, oil, and food in particu- lar, has seriously affected the poor in many low-income countries. While welcoming the call by President Zoellick for a `New Deal for Global Food Policy' and his initiative to set up a `Global Food Crisis Response Program' we call upon the World Bank to ensure that assis- tance under this facility is additional to the normal IDA allocation. We also welcome World Bank's recent moves to bring back agriculture sec- tor in the forefront of its agenda for development assistance. Simulta- neously, the international community must delve into the root causes of this crisis and remove policy distortions to ensure food security. The worst victims of climate change are the low-income developing countries and the poor communities whose contribution to this cata- strophic change is minimal. Recognizing the inextricable linkage between climate change and development, we welcome the strategic framework of the World Bank Group on development and climate change. We also welcome the establishment of two new Climate Invest- ment Funds. We, however, reiterate our call to address the climate change issue on the basis of the principle of "common but differenti- ated responsibility" as articulated in the UN Framework Convention on Climate Change. While we support the need for integrating actions on climate change into the development process, we believe that these actions should not compromise growth. Climate change action plans must be country-owned and backed by additional grant resources and technology transfer. Countries most vulnerable to climate change due to their geographic locations should be given adequate grant assis- tance, additional to normal assistance package, to meet both adaptation and mitigation needs. 33 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 34 Enhancing the voice and representation of developing countries in the decision making of the Bank is critical for its legitimacy and credi- bility as a multilateral development institution. We reiterate our view that the package of reforms to achieve this should address, amongst others, realignment of shareholding through a Bank-specific formula including weight of member countries in the global economy. Let me now say a few words about the Bangladesh economy. Despite successive natural calamities and exogenous shocks, macroeco- nomic situation continues to remain stable with growth over 6 percent per annum. Most of the MDGs are within our reach. Surge in fuel and food prices generated some inflationary pressure, as in many other countries. Notwithstanding targeted safety net programs of the govern- ment, the inflationary pressure has somewhat retarded our progress in poverty alleviation. Let me conclude, with the renewed hope that we will translate our commitments into concrete actions to build a world free of poverty. BELGIUM: JEAN-PIERRE ARNOLDI Alternate Governor of the Fund More than ever, all member countries should cooperate with the IMF and the World Bank in promoting financial stability, durable development, and poverty reduction. This requires that the Bretton Woods institutions continue to adjust to the rapidly changing structures of the global economy. The ongoing financial crisis calls for more effective Fund surveil- lance, which must be conducted evenhandedly. In doing so, the Fund will need the full cooperation of its members. The statement of surveillance priorities, which the IMFC endorsed this weekend, focuses on the right issues. Special attention must be devoted to strengthening financial sector surveillance. A reshaped Financial Sector Assessment Program must be better integrated in Fund surveillance. In this field, the Fund should fully exploit synergies with all relevant standard-setting bodies. The Fund should take the lead in drawing lessons from the current crisis and recommend effective actions to restore confidence and sta- bility, in cooperation with relevant fora and partners. The Fund must act effectively in giving timely financial assistance to countries hit by the crisis and to help improve, as needed, their macro- economic policy frameworks. The Fund's lending framework has become too complex and no longer fits the needs of the membership. We welcome the fact that the Fund has launched a major review of its financing instruments. This review should cover all existing lending facilities, conditionality, access 34 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 35 limits, and the cost of borrowing from the Fund. The objective should be to establish a simpler, more coherent and predictable framework, and enable the Fund to fulfill its mandate effectively. We see merit in a single, flexible facility. The reform of the Fund members' quotas and voice improves the representation for many countries. The governance of the Fund can also be further improved. The report of the Independent Evaluation Office on the Fund's corporate governance should be carefully consid- ered as part of a more comprehensive review program as outlined by the Executive Board and the Managing Director. The World Bank Group has embarked on the reform of voice and representation in its various institutions. We support the package that has emerged from the discussions. As we know it from the Fund, this reform is an ongoing process. The objective should be to endow the World Bank Group with a system that will allow regular adaptation to changing relative positions in the world economy while ensuring ade- quate representation of all members, including the smallest and poor- est. This process should be complemented by internal governance reforms, based on the proposed Board effectiveness reform package. The financial crisis must not let us forget the other crises that affect the poor. We refer, in particular, to the food and energy crisis. Although the prices of these commodities have declined in the recent past, for many commodities prices remain at historically high levels, and con- tinue to affect the poor in low and middle-income countries. The World Bank Group and the Fund must act decisively to promote food security and help overcome the financial consequences for the poor countries. Climate change is another challenge that calls attention. Whereas until recently the biggest problem was that of inaction, now we are faced with the specter of multiplicity of actions, bringing with it the dan- ger of fragmentation and ineffectiveness. We strongly favor the full use of the existing financing instruments. The World Bank is well placed to play an important role in shaping the financing mechanisms to combat climate change, which is an integral part of the development agenda. Poverty reduction remains an unfinished agenda. In a few weeks, in Doha, we will assess the progress made in promoting development since the Monterrey conference. That assessment will show important shortcomings. We must decide how to do better. In this, the World Bank and the IMF, with their unmatched experience and know-how are essential partners. In closing, I would like to echo what the Managing Director of the IMF told us this morning: strong support for and strengthening the roles of the Bretton Woods institutions, is the best strategy to make our cooperation as effective as it needs to be. In this, we all benefit from the contributions of the institutions' competent management and staff. 35 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 36 BOLIVIA: LUIS ALBERTO ARCE CATACORA Governor of the Fund The world is in the midst of one of the most severe crises in the his- tory of the capitalist system, potentially more serious than the Depres- sion of the 1930s. According to experts, the worst is yet to come, thus we in the emerging and developing countries are deeply concerned. As we all know, the international financial crisis has its epicenter in the developed countries; yet the smaller countries such as ours are not immune, even though our capital markets are not integrated with the rest of the world. The effects of the crisis could be catastrophic for some low-income countries that are commodity producers, given their external vulnerability. The external repercussions in terms of prices and export volumes may endanger poverty reduction policies and jeopard- ize efforts to attain the Millennium Development Goals. When the smaller countries faced macroeconomic imbalances, the IMF and World Bank recommended structural adjustment policies with financing subject to strict conditionality. Bolivia and other coun- tries had no choice but to accept these recommendations; however, these policies--based on market forces and limited government involvement--merely fostered social marginalization, harmed the envi- ronment, and exacerbated poverty. Conversely, when the developed countries create a crisis like the present one through inadequate gov- ernment supervision of the development of financial markets, no attempt is made to execute an emergency Financial Sector Assessment Program (FSAP), let alone adjustment programs. IMF surveillance ought to focus primarily on the larger countries, however, the Fund and the Bank did just the opposite, resulting in the obvious adverse effects that have radiated across the globe. The crisis in the global financial system, which is attributable to inadequate regu- lation by financial supervisors and speculative behavior by transactors in the main financial centers, will be resolved at the expense of poor people in the developed and underdeveloped countries. The 21st cen- tury demands a qualitative change in managing the crises spreading around the world, be they in the spheres of finance, food, energy, or cli- mate change. The developed countries must shoulder their responsibili- ties in this situation; they need to build a new international order focused on structural solutions to the economic, social, and environ- mental problems facing the underdeveloped countries. The governments of the developed countries and multilateral organizations are proposing short-term financial solutions that do not necessarily address the structural causes of the crisis and, therefore, may not work. In the current context, the building of a new interna- tional order calls for financial architecture and regulatory institutions 36 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 37 that promote comprehensive, orderly, and equitable development for all countries. Those of us whose countries are not to blame for the current crisis but are nonetheless suffering from its fallout should receive both finan- cial and commercial compensation. Accordingly, it is proposed that the World Bank and IMF make available to small countries specific pro- grams that entail resource allocations without conditionality. One of the key lessons we have learned from the current crisis is that, unless the State plays its role as leader in the development process and active participant in the economy, the attainment of the MDGs and poverty reduction will be seriously compromised. Finally, we are calling upon the President of the World Bank to accede to the Bolivian government's request to move forward Bolivia's denunciation of the Convention establishing the Interna- tional Centre for Settlement of Investment Disputes (ICSID Conven- tion) and withdrawal of its consent to have its disputes heard under ICSID jurisdiction. CAMBODIA: CHEA CHANTO AND AUN PORN MONIROTH Governor of the Fund and Governor of the Bank We are pleased to represent Cambodia at this important annual dis- cussion. We meet here today under extraordinary circumstances related immediately to the mandate of our two institutions. The crisis we face is multi-faceted and affects people all over the globe, mostly the poor and underprivileged. A cataclysmic and still enlarging financial crisis of unimagined and unprecedented proportions has engulfed all of us, catching us totally unprepared and unable to fully grasp its magnitude, extensive labyrinth of complexity and adverse effects spreading to all parts of the globe. This is a man-made tsunami, long in the making. No one in the modern financial world could foresee it until its full force has come to unfold in the recent weeks. All the postmortem, which would, no doubt, be done on its causes, would not solve the gigantic problems we would all face for years to come. Of immediate consequence to the developing and poor nations is that the slowing economies of the developed countries are shrinking demand for goods and services they import from the for- mer. This in turn will affect millions of jobs and send tens of millions below the poverty line from which they have only recently emerged. The mammoth financial bailout undertaken by the bigger economies to avoid an even bigger crisis puts at risk the level of development assis- tance and accommodation needed from them to meet essential millen- nium development goals in the rest of the world. 37 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 38 Inflation is running high all over the world reducing growth prospects, leaving the poor not being able to meet even their essential survival needs. Food shortages are occurring in part to due subsidies provided to diversion of food crops for bio-energy. Food and fuel prices continue to be high, volatile, and unpredictable. All these factors feed into each other, with compounding global effects. Shock waves have reached every corner of the earth. It is clear that free, unregulated markets cannot correct themselves. All of us here need to admit that our two global institutions with all their research expertise failed to notice such developments in advance and alert the world. They did not do their global watchdog functions. They seem to have been more absorbed in the euphoria of preaching to developing countries and prescribing to them impossible conditions. Even as they imposed more and more reforms on borrowers, they had relegated pursuit of agricultural research, production, and productivity. Our institutions turned the spotlight on poor countries failing even to notice the mammoth turmoil brewing here in their own backyard. But, the crisis we face gives us a real opportunity to start afresh. We need to critically review the mandate and functions of the two institu- tions so that they get out of 20th century mindsets and become more tuned, alert, capable, responsive, and ready to face the 21st challenges. Cambodia joins in the calls made by others to come up with new roles, shape, structure, and accountability for the two institutions so that they can truly keep a watch over global developments, not merely in the poorer part of the world. We need to set in place sensors and triggers that can alert us in advance about any crisis in the future and to enable us to take adequate alleviating action just as we do when we know of natural disasters in the making. We need to protect the world from such disasters in the future. The review needs to be conducted by a body of experts, drawn from the academic world and public finance practitioners including from the developing world. A high-level body needs to be set up consisting of governors of the two institutions with proportional representation from all regions. There is at the same time the need to expand and enhance intra regional cooperation and solidarity through regional bodies, institu- tions, and mechanisms. Effective regional bodies and intra regional investments could possibly cushion against future global shocks. Even as the world manages the ongoing crisis, it is imperative that we don't lose sight of our long-term global commitments to alleviate the miseries of the poor in mostly developing countries. The task of poverty alleviation and reaching promised millennium development goals cannot afford delays or postponement. If any, it needs much faster acceleration and concerted action. Not only our two institutions 38 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 39 but all other international and bi-lateral partners should ensure that programs of assistance to these ends do not slacken but get enhanced. The present dark clouds over our skies should not stop us in our march. Cambodia is getting fast integrated into the global economy. Because we are less developed we have so far been only bruised by the global events and not very severely affected. We already feel the pains of high inflation, slowing economy and reducing exports, which affect our earnest efforts to reduce poverty, which have shown impressive success so far but are at risk now. We can no longer sustain our recent annual double-digit growth rates in the near future. Our inflation will remain higher than we would like. Our immediate concern is not to let anyone slide back into poverty from which they have only recently stepped out. We see opportunity in the crisis to make our economic base more diversified by optimally using our natural endowments in rural areas where immense potential for increasing agricultural pro- ductivity remains untapped. The renewed focus on rural areas will also help us to immediately and directly address issues relating to poverty reduction. Direct assistance to poor farmers by way of improved seeds, inputs, and extension services will at once alleviate poverty and broaden the economic base in a sustainable manner. Both the World Bank and the UN have clearly acknowledged that this is the need in most parts of the world. In the tasks ahead in Cambodia, we need continued help from our development partners and international and regional institutions in the following ways at least: First, write off, or provide swap arrangements in regard to, past out- standing debts, some incurred during a war period dating back to more than thirty years ago. The released resources could be ploughed back into the rural economy and toward achieving millennium development goals. Second, provide funds for direct assistance to the poor in rural areas to improve their livelihood through better inputs and practices in agriculture. Third, open up markets in the developed world by reducing tariff and local subsidies for products that we can best supply at lower cost. Fourth, international institutions start to function more effectively as the advocate of poorer countries in the international arena. The Cambodian delegation looks forward to a meaningful debate and emergence of a clear course of action at this meeting. We now turn to other matters on our agenda. We agree with the core objectives and the broad set of guiding principles as outlined in the paper on voice and participation at the Bank. We would like to stress that the voting powers of the smaller members should be protected. We 39 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 40 support the increase in IBRD basic votes, which will have a bigger impact on raising the voting power of smaller countries. Practical options for realignment of IBRD shareholding should be considered. We support an additional chair for Sub-Saharan Africa in the Bank's Executive Board. We want to see this effort implemented in the broader context of Board effectiveness and governance. On the selection of Bank President, we believe that the process should be consistent among the World Bank group, IMF and the Regional Development Banks. We find that the six strategic directions in the Bank's Strategic Framework for Development and Climate Change support the vision of the World Bank Group of "contributing to an inclusive and sustain- able globalization--to overcome poverty, enhance growth with care of environment, and create individual opportunity and hope." However, "public goods" are also vital to address adverse effects of climate change and should not be crowded out of IDA funds. The Bank should mobilize additional financial resources to support strong country own- ership and target specific interventions. We have noted with regret that, by using the International Procure- ment Agency (IPA) arrangement, the Bank financed portfolio for Cam- bodia suffered a decline last year and would do so next year. This would represent the worst portfolio performance since we began to receive assistance from the Bank.We are disturbed by such poor results. We wish now to present to you some highlights of Cambodia's macroeconomic and financial performance. Our socioeconomic agenda is spelt out in the Rectangular Strategy we have developed and adopted in 2004 and is implemented through our National Strategic Development Plan, 2006­2010. The Royal Government formed after the recent general elections has reaffirmed this strategy and will con- tinue it in its second phase. As a result of clear vision and concerted action on a package of policy-oriented measures, despite some difficulties and attendant social pains, a number of positive developments are taking place in the country. Poverty level in the country declined rapidly in three years, from about 35 percent in 2004 to 30 percent in 2007. In 2008, we expect that GDP growth would continue at a healthy level, though declining from the two digit levels seen in the last few years. Per capita income rose to US$594 in 2007 increasing by over 50 percent in three years from 2004. Foreign reserves doubled during this period and now stand at $1.9 billion. Exchange rate with US dollar will remain fairly stable. Budget performance would continue to improve with rationali- zation and reorientation of public expenditures. We are quite optimistic about prospects of revenues from exploita- tion of our oil and natural gas reserves. We will ensure that benefits accrue to and are available to all Cambodians whose common heritage 40 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 41 they are. The additional revenues will be used for targeted investments in priority sectors set out in our National Strategic Development Plan. We are fully committed to managing revenues from our natural resources in a transparent and effective manner for the long-term development of the country and with full accountability. Inflation, which was well managed and contained until 2006, sud- denly increased in the last quarter of 2007, spurred both by the exter- nal environment already pointed out and by internal pressures, includ- ing high liquidity in the system. It has continued at a high rate since then. This has prompted a more prudent management of prevailing monetary conditions. The monetary policy implementation has focused on managing the excess liquidity and the over-involvement of banks in the real estate sector, which could have adverse consequences. Among measures undertaken were increasing the statutory reserve require- ment from 8 percent to 16 percent, increasing the capital requirement of the banks, and reduction in real-estate lending. In the area of fiscal policy, despite few expansionary measures to contain the impact of inflation on livelihood of the most vulnerable group of population, the general policy line of the Royal Government is limiting spending, increasing current budget surplus, reducing overall budget deficit, increasing Government's deposit in the banking system and redirecting spending towards productive sectors, especially agriculture and rural economy. However, the Royal Government, conscious of the trade-off between inflation and growth, will follow a flexible approach. In strengthening of the banking system, we have moved away from judgmental loan classification to the prudential asset classification based on objective criteria, adopted strict criteria for the level of provi- sioning to be applied to various grades of loans, and enhanced credit information sharing system. The implementation of reforms and strengthening of the institutional structure of the banking sector in Cambodia has had an all round salutary impact on the financial health of the banking system, as evidenced by the significant improvements in a number of prudential parameters. The average capital adequacy for the commercial banks in June 2008 was 25.5 percent, well above the bench mark of 15 percent despite significant growth in the aggregate assets of the banking system. In regard to the assets quality, the non- performing loan ratio, which was as high as 14.8 percent in 2002 and 9.9 percent at the end of 2006, declined significantly to 2.6 percent as at the end of June 2008. These figures have been driven by loan loss pro- visioning by the banks as also by the improved recovery climate enabled by the more supportive legislative environment. In sum, our system in the banking sector supervision has worked satisfactorily and the volume of business transactions undertaken by the sector has been increasing steadily. The level of financial deepening 41 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 42 has accelerated with increased financial services promoted through the progressive reforms implemented under Financial Sector Blue Print, 2001­2010, which was in late 2007 updated to Financial Sector Devel- opment Strategy, 2006­2010. Reforms in other areas of the banking activities are also underway. These include strengthening and supporting the growth of microfi- nance institutions, the improvement of corporate governance and banks internal audit, enhancing credit information sharing system, and enabling financial leasing business for banks. We have also accentuated our efforts to ensure an efficient implementation of the Law on Anti- Money Laundering and Counter-Financing of Terrorism that was adopted in 2007 through the recent establishment of the Financial Intelligence Unit and will allocate resources to facilitate capacity of this unit. Ladies and gentlemen, we wish to record our appreciation of the assistance Cambodia has received from the Bank and the Fund. We also urge that the Fund to exclude poor countries from its new scheme on "country contributions" or charging for policy technical assistance. In conclusion, we wish to once again thank the Board, management, and staffs of the Bank and the Fund for their readiness to respond to the needs of Cambodia and for providing support over the years. CANADA: JAMES MICHAEL FLAHERTY Governor of the Fund and the Bank We are experiencing a time of global economic and financial uncer- tainty that in some respects is unprecedented in the last half century. Virtually no country is immune to the risks stemming from the turmoil in global financial markets and many are facing serious dislocations from the sharp hikes and volatility in commodity prices we have wit- nessed. In these difficult times, having strong global institutions like the World Bank and the IMF is a tremendous asset. We must use the momentum for reforms in both institutions to ensure they are fully equipped to pursue their important mandates. Global and Canadian Prospects The global economy continues to be buffeted by shocks emanating from the turmoil in many parts of the global financial system and by increases in the prices of commodities central to people's standards of living. Growth in the major advanced economies has slowed sharply, and although emerging markets will remain the major driver of global economic growth, their pace of growth is expected to slow. This has made it increasingly important for countries to work together to pro- 42 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 43 mote a return to strong sustained global growth and stability. I believe that finance ministers should meet again in the coming weeks to ensure continual progress. The government of Canada also supports the idea put forward by President Sarkozy of a leaders' summit to review meas- ures to strengthen the international financial system. Many economies are better placed today to weather these shocks due to past improvements in policy frameworks. Canada, along with others, took the necessary measures in recent years to put public finances on a sound footing. This has provided us with the flexibility to respond to signs of a softening of growth with timely fiscal stimulus while continuing to maintain a balanced budget. While headline infla- tion has picked up globally as a result of oil and commodity price increases, the increased credibility of central banks who have adopted strong policy frameworks have generally kept inflation expectations well anchored. However, signs of higher inflation are more worrying in several emerging market economies, many of which are sacrificing some of their monetary policy independence by limiting the flexibility in their currencies. Economic growth in Canada has weakened since the end of 2007 as a result of the United States slowdown, which, coupled with a higher Canadian dollar, has significantly reduced Canadian exports. However, as a result of the strong dollar and higher commodity prices, Canadian consumers and businesses have benefited from rising real incomes and profits. As a result, domestic demand growth in Canada remains solid despite slower growth overall. Moreover, Canada's economic funda- mentals remain strong: employment has continued to increase this year; the unemployment rate remains near a 33-year low; the financial sector remains strong and well-capitalized; the financial positions of consumers, businesses and governments are sound; and core inflation remains low and stable. The IMF expects Canadian growth to be 0.7 percent in 2008, increasing to 1.2 percent in 2009. Core inflation pressures remain contained at 1.7 percent in August 2008, despite a recent uptick in headline inflation. Total consumer price inflation was 3.5 percent in August, compared to a recent low of 1.4 percent in March 2008 reflecting increases in the prices of energy and food products following sharp increases in world prices earlier this year. On October 8, the Bank of Canada joined other major central banks in a simultaneous reduction of policy interest rates by 50 basis points. This significant action will provide timely support for the Cana- dian economy. Canada's fiscal situation remains strong. In fact, it remains the best of the G-7 countries. According to the IMF's fall outlook, on a total government basis, Canada's budget surplus was 1.4 percent of GDP in 2007 and is projected to remain in surplus for 2008 and 2009. Canada 43 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 44 also has a very strong track record on debt reduction. Our total gov- ernment net debt, as a percentage of GDP, has declined steadily from a peak of nearly 71 percent in 1995 to about 23 percent in 2007. The IMF's Role in Low-Income Countries Canada commends the recent work done by Staff and Management to address the particular needs of low-income countries through the presentation of a comprehensive approach to IMF engagement in these countries. In order to achieve economic growth and poverty reduction, and to reach the Millennium Development Goals, macro- economic and financial stability are essential. This is why the Fund's work is so important and must remain focused and effective, especially in the context of a more stringent budget environment. Key to this will be avoiding the re-emergence of unsustainable debt in post-debt-relief members and preventing its emergence in other low-income members. Coherence with the World Bank and other institutions and develop- ment partners remains fundamental to the effectiveness of the Fund's activities in low-income countries, and should be strengthened further wherever possible. IMF Governance Reforms Subsequent to the successful conclusion of discussions on a new quota formula this past spring, it is now time to address a broader reform agenda for the Fund's governance. The April 2008 report of the Independent Evaluation Office highlights broad areas that need to be addressed, such as strengthening the strategic role of the International Monetary and Financial Committee, increasing the strategic focus of the Board of Executive Directors as well as clarifying its oversight role, and clarifying the accountability of the Managing Director and Staff. We also need to make further progress to open the selection process for the heads of international financial institutions. I believe that these are all relevant issues which, once resolved, will lead to a more legiti- mate and effective institution. Surveillance Reforms IMF surveillance is at the heart of the Fund's mandate of promot- ing global stability and important innovations have been made in this area. Recent developments in global financial markets underscore the appropriateness of the Managing Director's vision for the IMF as being an international centre of excellence on linkages between the financial system and the real economy. It will be critical to continue to 44 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 45 strengthen the IMF's analytic capacity in this area and to continue to improve the manner in which it communicates its analysis of macrofi- nancial developments to policymakers and the public. In June of last year, the Fund adopted the 2007 Decision on Bilateral Surveillance over Members' Policies to further improve the effective- ness of its surveillance activities. Since then, we have noticed improve- ments in the focus of Article IV reviews, although the all-important goal of increasing the candor of surveillance reports remains a work in progress. The time has now come to support the full implementation of the 2007 Surveillance Decision, including the use of the ad-hoc consul- tations process to ensure that concrete results are achieved. In this respect, I am very pleased that the International Monetary and Financial Committee have just endorsed the IMF's first Statement of Surveillance Priorities (SSP). I view the new SSP as an important complement to the 2007 Surveillance Decision in that the SSP provides the opportunity to enhance the focus of IMF surveillance on the most pressing issues, promote greater consensus within the membership on the key economic vulnerabilities and risk and the need to address them, and improve the accountability of the IMF for its surveillance outputs. It is important that we use the SSP to its full potential. Review of IMF's Financing Role and Instruments The recently launched strategic review of the Fund's lending tool kit is timely. The global economy has changed so much since the Fund's tool kit was originally designed that mere incremental changes are unlikely to ensure a modern and appropriate mix of lending facilities. While some aspects of lending have already been addressed, such as changes to the Exogenous Shocks Facility, critical work is also needed to ensure coherence and effectiveness across the range of instruments. More fundamentally, the Fund should look back at the context in which each lending instrument was first created to evaluate its rele- vance to address today's challenges. Food and Fuel Prices High global food and fuel prices continue to be a critical develop- ment concern, and we commend the Bank and Fund for drawing early attention to the crisis and helping to place it high on the international agenda. This crisis requires a rapid and effective response. In this regard, we welcome the prompt action taken by the Bank to facilitate a coordinated and multifaceted response. With offices in more than 100 countries, the Bank is well positioned to integrate a response to the food crisis directly into existing country programs, aligning with the 45 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 46 country's priorities in harmonization with other donors. Likewise, we are pleased with the prompt action by the Fund to provide advice, technical support and in some cases funding through PRGF programs. We also welcome recent reforms to the Exogenous Shocks Facility to make it a more effective crisis response tool. Action is not only needed to relieve the immediate effects of the current food crisis. As the recent High Level Event on the Millennium Development Goals (MDGs) noted, the first MDG, to reduce hunger by half, is unlikely to be met by 2015. Thus, food security is an on-going and serious problem that must not be forgotten once the current crisis is no longer at the top of the international agenda. As an illustration of the size of the challenge, it is expected that food production in Sub- Saharan Africa will need to double or even triple over the next few years to meet local demand. In this context, we encourage the World Bank to focus on invest- ments to promote sustainable forms of agricultural production, espe- cially those that would benefit smallholder farmers who are most in need of support. It is especially crucial to ensure that programs are designed to be equitable and to meet the needs of the most vulnerable, often women and girls. Another key part of the solution will be to fos- ter innovations for increased agriculture productivity, including through public-private partnerships. World Bank Reform Enhancing the participation of developing and transition countries in the World Bank's decision-making processes is an important objec- tive and we are pleased with the discussion and work to date on the Bank's Voice and Participation reform exercise. We will continue to support and participate in these efforts. Adjustments to increase the voting power and shareholding of developing and transition countries and an additional seat for Africa at the Executive Board are important components of voice reform, and we look forward to agreements on these options. We believe that fur- ther measures to improve focus and communication within the Execu- tive Board are equally important, and in this regard, we look forward to the World Bank's management and the Executive Board elaborating a set of specific reforms. We are also pleased with the steps the Bank has taken to improve the voice of developing and transition countries in their operational work, such as the appointment of more developing country nationals to senior management positions and the decentral- ization of their operations. We encourage the Bank to continue to explore what more can be done in this regard. 46 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 47 Stronger engagement of developing and transition countries in the World Bank's decision-making will yield many benefits. Strong partici- pation of all members at the Board of Governors and the Executive Board will be a key backdrop for the Bank becoming an even better platform to support dialogue and collective action on global issues. It can help improve the design of new sector strategies and instruments as developing and transitions countries bring lessons learned from their own country programs to the table. Finally, more voice for the Bank's client countries at the operational level will help with the suc- cess of lending programs by ensuring that projects are properly tai- lored to country contexts and that governments have a true sense of ownership and accountability over them. CHINA: YI GANG Governor of the Fund The U.S. financial crisis has taken a serious turn for the worse and continues to spread across the globe. Economic growth has slowed markedly worldwide and we face enormous uncertainty. For the inter- national community, the most urgent task is to join efforts to stem fur- ther deterioration and spread of the crisis--the major threat to global growth--and restore global economic and financial stability. The Bret- ton Woods institutions should fulfill their mandates to maintain global monetary and financial stability and facilitate sustainable, balanced growth. We hope the measures adopted by advanced economies to stabilize financial markets--particularly the Emergency Economic Stabilization Act of 2008 in the United States--will be implemented quickly and yield positive results in restoring confidence and stabilizing the finan- cial markets. China will continue to strengthen its cooperation with concerned countries and hopes that all governments will work together to overcome the current difficulties and restore international financial stability. From the medium- and long-term perspective, the reserve cur- rency issuing countries must assume international responsibility, com- mensurate with their positions, for advancing structural adjustments, increasing savings, and preserving economic health and sustainable growth to benefit balanced and stable growth of the global economy. In 2008, China has weathered the shocks of natural disasters and an adverse external environment. While maintaining stable and relatively rapid economic growth, clear progress has been made with structural adjustments. Consumption has increased, the trade surplus has nar- rowed, and the growth of foreign exchange reserves slowed. The indus- trial structure has been improved. Every effort is being made to protect 47 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 48 the environment through intensifying energy conservation and the reduction of COD and SO2 emissions. Inflationary pressure has decreased with the CPI dropping in recent months to 4.9 percent y-o-y in August. In addition, financial institutions in China remain sound. After several years of comprehensive financial reforms, the capital ade- quacy of financial institutions have reached a historical high, corporate governance has improved markedly, and risk management strength- ened significantly. There is ample liquidity in the market. Overall, the fundamentals of the Chinese economy are solid and resilient. We are confident we can weather the financial turmoil. With the global eco- nomic slowdown, it is important that China maintains its stable and rel- atively rapid growth. We remain committed to expanding domestic demand--household consumption in particular--by providing a better social security sys- tem. In the rural areas we are improving medical schemes and making additional resources available for infrastructure and education. The successful implementation of these adjustments will further improve the external and internal balances. Here, I would like to make special mention of the substantial progress in reforming the renminbi exchange rate formation mecha- nism. Exchange rate flexibility has increased markedly and the exchange rate increasingly reflects the fundamentals. From introduc- tion of the exchange rate reform in July 2005 to end-September 2008, the real effective exchange rate (REER) of the renminbi calculated by the Bank for International Settlements appreciated 21.8 percent, an average annual rate exceeding that of the euro, the yen, and currencies of other emerging Asian economies. From the unification of exchange rates in 1994, the REER appreciated 54.47 percent. In the past two months, the renminbi has appreciated 15 percent against the euro. The ongoing improvement in China's balance of payments demonstrates that the renminbi exchange rate is closer to the fundamentals. China attaches significant importance to the role of the Bretton Woods Institutions. The Fund should give the surveillance priority to the ongoing financial turmoil, deepen its analysis, learn lessons, and lis- ten to the opinions of member countries. In providing a practical and effective guide for the Fund's surveillance and in adapting to global economic developments, the 2007 Surveillance Decision should be reviewed and revised as soon as possible so that the Fund can deter- mine where the true risks lie, and adopt effective measures to maintain a stable and orderly global economic and financial system. From the medium- and long-term perspective, the Fund must address the inher- ent deficiencies of the current international monetary system and fos- ter an international financial architecture adaptive to the evolving global economy and financial markets. 48 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 49 As the largest multilateral development institution, the World Bank should re-assess the challenges confronting the developing countries-- soaring food and fuel prices, higher financing costs, deteriorating bal- ance of payments positions, and mounting inflationary pressures. With the advantages of its financing capacity and expertise, the World Bank should urge the developed countries to shoulder their due responsibili- ties in stabilizing the global economy through targeted measures, car- ried out in an even-handed and professional fashion. We welcome the World Bank's active participation in the global response to climate change and formation of the World Bank Group's Strategic Framework for Development and Climate Change. In accor- dance with the United Nations Framework Convention on Climate Change and the Kyoto Protocol, we agree that in carrying out its core mission of poverty reduction and development, and, with no policy conditions attached, the World Bank should vigorously encourage the transfer of low-carbon technologies and provide recipient countries with practical aid in facilitating their response to climate change. Enhancing the voice and representation of developing and transi- tion countries (DTCs) in the World Bank's decision-making process is an essential component of its governance. Ensuring that all DTCs ben- efit in the reform process and the ultimate achievement of a 50/50 dis- tribution of voting rights is the most fundamental and important objec- tive of World Bank reforms. With the proviso that existing DTC Executive Director seats are not affected, we support the addition of a Chair for the African constituency, and endorse further discussion on the selection process for leadership of the World Bank in accordance with the principles of openness, competition, and merit. CROATIA: BORIS VUJC IC´ Governor of the Fund It is my honor to address the 2008 Annual Meetings of the Boards of Governors of the World Bank and the Fund here in Washington D.C. This year stands out as a year in which the Fund undertook impor- tant governance and finance reforms, broadly supported by its mem- bership. But, it also stands out as a year in which the landscape of financial markets is being changed, triggered by financial crises in the US market, and a year in which inflation came back. With no doubt, the latter two developments represent a test for the international financial system and add to the Fund's challenging task of promoting the stabil- ity of the international monetary system. Allow me first to outline the major economic developments related to Croatia. Thereafter, I will touch on Croatia's relations with the Fund 49 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 50 and the Bank, and finally, I intend to discuss a couple of policy issues relevant for the Bank/Fund business. Croatia, like other emerging European economies, was faced with increasing inflation rates during the last 12-month period, mainly due to increases in food and energy prices, but also due to demand pres- sures, given strong private consumption growth, especially in the last year. More than half of the July inflation rate (8.4 percent; annualized) can be attributed to increases coming from food prices, while an addi- tional quarter comes from oil and electricity prices. However, we expect the inflation to ease by the year-end, and to come down towards 5 percent. In achieving this, the central bank will continue to rely on exchange rate stability that anchors inflationary expectations, as well as on polices that, on the one hand, restrain excess liquidity in the bank- ing system, and on the other hand contain banks' credit activity within reasonable limits (i.e. on policies that help contain demand pressures and safeguard stability of the financial system). The role of the govern- ment also continues to have a paramount importance in curbing infla- tionary expectations by suppressing any wage demands (within their jurisdiction) that would go beyond productivity gains, which serves as an important signal. It thus helps prevent potential second-round effects (through the wage spiral) on inflation. No doubt, besides the prudent policies on the domestic front, future inflationary path will continue to depend primarily on global developments in food and oil prices. In this respect, we very much welcome the analysis on commod- ity prices and inflation provided in the coming World Economic Out- look, which gives no reassurance that the price hikes of food, metals and oil that we have been observing in the recent past are firmly behind us. Ongoing distress in global financial and capital markets, particularly in the US, is not hurting Croatia's banking system, which accounts for three-quarters of the total financial system assets in Croatia, and repre- sents the most important source of funding for the economy. Neither can we see any immediate risks that could arise in the foreseeable future (affecting the stability of our banks). This is so because Croatian banks have not been directly exposed, nor have their parent banks had any significant exposures to the developments in the US. And thanks to the central bank's measures (both monetary and prudential ones) that have helped build solid cushioning elements into the system over the recent past. On the one hand, these measures have restrained excessive credit growth and foreign debt build-up, while on the other hand, they have ensured a build-up of liquidity reserves in the banking system that can help the system in withstanding even the serious international financial market disturbances we are currently witnessing. We observe, though, some indirect effects of the distress on our banks: lending stan- 50 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 51 dards tightening and slightly increasing interest rates. But so far, these factors have not been affecting banks' activity in a way that would require the central bank's reaction. Also, we observe the impact of the distress on the Croatian capital market, but this has a very limited effect on broader economic activity, given the negligible role of the capital market in real economy financing, and even helps in both cool- ing private consumption and reducing banks' foreign borrowing, as money has started to move back from investment funds and shares into bank deposits. Against this background, the Croatian economy is in a cooling mode this year; after the last year's very strong growth performance (5.6 percent) primarily fuelled by buoyant private consumption. The economy is expected to grow by roughly 4 percent this year, mainly due to decelerating private consumption and weaker net exports' per- formance. The budget deficit for 2008 is projected at 1.3 percent of GDP (ESA 95 methodology). The fiscal impact together with the fact that the pensioners' debt repayment scheme has entered into the sec- ond stage this year (with lower annual installments paid out to pen- sioners) will, however, have a far less expansionary effect on the econ- omy this year than in 2007. Nonetheless, current account deficit is expected to deteriorate to ­9.7 percent of GDP in 2008, (from ­8.6 per- cent of GDP last year), primarily as a consequence of this year's oil price hikes. External debt, on the other hand, is likely to improve by 1.7 percentage points of GDP, to 86.9 percent of GDP in 2008. An important contribution to an expected relative decline in external debt will come from banks, since banks have been scaling back their foreign liabilities as a reaction to the central bank's measures. While keeping a close eye on inflationary developments in the recent past, the Croatian authorities have remained strongly focused on external imbalances. In this respect, further fiscal consolidation that should help narrow the domestic savings-investment gap continues to be an objective of the policy stance. Government plans to achieve a balanced budget by 2010. On the monetary and financial fronts, the central bank has been taking new measures and vigilantly improving the existing ones for quite some time now, with a view to protecting the soundness of the banking system and supporting the overriding goal of external debt stabilization. As a result, banks' credit growth deceler- ated to reasonable levels over the last two years (but at no expense for productive investments), the banking system continues to be well- capitalized and sound, and it is well-positioned to withstand potential macroeconomic shocks of a reasonable magnitude. Turning to my second point--Croatia's relations with the Fund and the Bank--I first want to stress that Croatia continues to have open and fruitful discussions with both the Fund staff (within the framework 51 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 52 of Article IV Consultations) and the Bank staff. The Bank has been supporting Croatia in its efforts to intensify structural and institutional reforms that should make Croatia better prepared for the EU mem- bership through Programmatic Adjustment Loans. In addition, Croatia has benefited from the Bank's investment lending focused primarily on improving social welfare, enhancing economic competitiveness, pro- tecting the environment, improving trade and transport infrastructure, and advancing Croatia's knowledge-based economy. Croatia has also been actively and intensively participating in a number of the Fund/Bank initiatives aimed at strengthening the archi- tecture of the international financial system. Let me note in this con- text that in late 2007, the Fund/Bank staff conducted an Update of the Financial Sector Assessment Program for Croatia, which at the outset confirmed the soundness and resilience of the banking system. Also, apart from the ROSCs included in the FSAP, Croatia participated in two ROSCs in the recent past: the ROSC on Corporate Governance and ROSC on Accounting and Auditing. Moreover, in close coopera- tion with the authorities, the Bank staff is currently performing a Diag- nostic Review of Consumer Protection and Financial Literacy. Besides, I wish to thank both the Fund and the Bank for providing us with expertise and technical assistance in specific areas, which is very much appreciated. Finally, let me touch on a couple of policy issues relevant for the Fund/Bank business. First, regarding the Fund's governance reform package, Croatia supported enhanced voice and participation of low- income countries in the Fund by adopting the relevant Amendment to the Articles of Agreement of the Fund, as well as the second ad hoc quota increase for underrepresented countries based on a new formula this year. Let me note that the new formula has brought much-needed transparency into the quota calculation process, and it also strikes right balance between the size of countries and their openness. However, it failed to deliver simplicity. In this regard, any further work on the quota formula should restrain from including new variables, especially those for which data availability and reliability is questionable. Second, Croatia gave its support to the Fund's efforts to develop a more sus- tainable income-expenditure framework by accepting the Amendment to the Articles of Agreement of the Fund aimed at expanding the Fund's investment authority. With more degrees of freedom to invest, the Fund has obtained an opportunity to put its own finances on a sus- tainable path over the medium-term. However, this opportunity requires more responsibility on the part of the Fund, especially in times of financial distress. Third, concerning the Bank, we believe that increasing voice and participation of DTCs, is important for further enhancing the legitimacy, credibility, and effectiveness of the World 52 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 53 Bank. We welcome the measures already taken by the Bank to increase country ownership and project communication, and we encourage the Bank to increase its efforts in this respect. Finally, we are pleased to see that the trend of improved development outcomes from Bank lending continued over the last three years, and that more and more projects are now better meeting their development objectives. Therefore, we see the ARDE as a tool for providing a good analysis of the state of the Bank's program portfolio. Allow me in conclusion to thank our hosts for their hospitality and excellent organization of these meetings. Let me also express my appreciation to both Mr. Strauss-Kahn and Mr. Zoellick for their dedi- cated services to our institutions. I wish the Fund and the Bank success in their future undertakings. ESTONIA: IVARI PADAR Governor of the Bank (on behalf of the Nordic-Baltic Countries) I am honored to address the 2008 Annual Meeting on behalf of the eight Nordic and Baltic countries--Denmark, Finland, Iceland, Latvia, Lithuania, Norway, Sweden and Estonia. Our constituency strongly believes that the World Bank Group plays a crucial role in the fight against poverty and in the achievement of the Millennium Develop- ment Goals. We truly appreciate Mr. Zoellick's work as the President. Today, I will mostly focus on gender issues that are very important. I will also talk about the needs of Africa, especially the fragile states, the World Bank's role in the Climate Change agenda and the importance of private sector development. But let me commence by saying a few words about the changing global economic environment. Crisis in the financial markets, global slowdown and increased com- modity prices that have led to high inflation, concern us all, not least the poorest countries. This changing external environment stresses the need for strong multilateral institutions to stand ready to play a counter-cyclical role. Indeed, the first priority for the use of IBRD and IFC capital must be preserving their ability to respond fast to potential increase in demand from client countries and companies. We all must remain committed to the long-term development agenda, regardless of the present events. Despite the current financial crises we encourage all donors to fulfill their commitments as agreed in the Monterrey Consensus, including the 0.7 percent of GNI to ODA; and also the full financing of the Multilateral Debt Relief Initiative and the Heavily Indebted Poor Countries initiative. We strongly believe that in order to meet the Millennium Develop- ment Goals, it is of vital importance to enhance our efforts on two 53 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 54 overarching issues, namely gender equality and climate change. As we all know, the aspect of gender is undeniably interlinked with all the development issues. Economic empowerment of women pays off and has a large impact on private sector development, health issues, child and maternal mortality, education and more. The World Bank has estimated that it takes a doubling of resources in order to achieve the Millennium Development Goal number 3 on gender equality. With President Zoellick's six very concrete commit- ments to the gender equality and the timely implementation of the Gender Action Plan, the Bank is beginning to show a leadership in placing women at the center of development. We expect to see this important political leadership translating soon into sufficient resource allocations. We are happy to note the World Bank Group's increasing involve- ment in Sub-Saharan Africa, and especially in the fragile states. Fragile states are often plagued by violence, conflict and instability. In such sit- uations, the women and children are suffering the most. These groups are also often excluded from processes and efforts to overcome conflict and violence. We have an obligation, as donors, to give specific atten- tion to the needs of these vulnerable groups. We commend the Bank for taking on an active role in combating climate change whilst underscoring the leadership role of the United Nations Framework Convention on Climate Change in the climate negotiations. The World Bank Group is well positioned to successfully address climate change challenges over the long-term, including part- nering with developing countries in order to help them to establish and execute climate sensitive development policies. However, the social dimensions of climate change cannot be ignored. The climate change impacts often differ by gender and we believe that the Bank's regional and sector strategies must adequately address it. The role of the private sector as an engine of growth is well-known. In order for the private sector to successfully contribute to national development policies, institutions and regulatory frameworks are essential. We encourage the IFC, in close cooperation with other World Bank institutions and donors, to continue to pursue private sector development in the most difficult environments, in particular to Africa. The IFC and other donors play an important catalytic effect; and should continue investing in countries and sectors where the private sector otherwise would not. We welcome the Bank's increased attention on the role of women in business. The Doing Business Report illustrates numerous obstacles, limitations and discriminations that still exist against women in many developing countries. These are not only obstacles to women, but obsta- 54 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 55 cles to development and economic growth. We commend the staffs of the World Bank and IFC for their ongoing work in developing the Gen- der indicator for Doing Business. We believe it will initiate debate and bring the much-needed attention to the regulatory issues confronting women entrepreneurs. The partnership between the World Bank and the Nike Foundation on the Adolescent Girls Initiative is another excel- lent example, supported by many countries in our constituency. We hope to see an increasing World Bank cooperation with the private sec- tor also in terms of more strategic Corporate Social Responsibility and the economic empowerment of women. Our constituency will continue to work actively with the Bank on these matters. The World Bank is a dynamic institution. This character allows its clients to fully benefit from the Bank's services. As they develop, former clients can take on more responsibility. Our constituency is a good exam- ple of this--all the Baltic countries have now graduated from IBRD client country status and are gradually joining the donor activities, where our Nordic neighbors have already set an impressive standard in deliver- ing up to ODA targets and even exceeding them substantially. Mr. Zoellick, on behalf of our Nordic-Baltic constituency, I would like to thank you for your dedicated leadership of the World Bank Group and wish you success for the years to come. FIJI: PECELI VOCEA Governor of the Bank It is indeed an honour to address you on this annual meeting of the International Monetary Fund and the World Bank, on behalf of the government of Fiji. Hon. Zoran Stavreski, I offer you my congratula- tions on your appointment to chair this joint annual meeting. The international economy has been beset with a series of chal- lenges in the past year that has raised uncertainties on many fronts. Many advanced economies face recession whilst growths of emerging market economies are slowing down. The spillovers of the crisis includ- ing weak external demand, persistent inflation and tight credit condi- tions have become apparent and dim any hope of a quick turnaround in global growth. The crisis unfolding in the financial markets is of historic propor- tion. The problems beginning with the sub-prime mortgage markets more than a year ago, have reached unprecedented levels. It is evident that problems and risks taken on by financial institutions were veiled by huge corporate profits. With financial globalisation, the turmoil on Wall Street has serious implications for the rest of the world, as sys- temic risks have the potential to ignite a global credit crunch. 55 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 56 The fact that countries have taken a comprehensive approach to relieve the stress on their financial institutions and markets indicates that the financial crisis has now become a global problem. The systemic nature of the crisis calls for extraordinary or even unorthodox meas- ures to calm the markets, restore financial stability and improve confi- dence. At the same time, we caution that these measures be carefully designed to avoid stifling proper functioning of market mechanisms and themselves being sources of risks. Furthermore, the financial regu- latory architecture needs to be modernised and sound risk manage- ment practices developed so as to avoid a repeat of such a massive global financial catastrophe in future. Small and open economies like ours are deeply concerned about the financial market events, which no doubt will have wide-ranging impact on us. It adds to the already precarious situation we face in managing the risks related to commodity price increases. Policy making as a result, has become more challenging with the trade-off between inflation and growth whilst ensuring financial stability is at the fore- front of policy makers' consideration. As such, the current crisis calls for more urgency in strengthening surveillance. The series of crises that we have seen lately raises a lot of questions about the vigilance of the Fund and the Bank. In this regard, we wish to emphasize the following. Firstly, it is important to enhance the sur- veillance of advanced and systemically important economies. It is evi- dent from the crisis that there may have been oversight on this front that has now proven disastrous. Secondly, the advanced and systemi- cally important economies should also be included in the vulnerability exercise. Thirdly, the Fund should be more holistic in its exchange rate assessment. In addition, we believe that in implementing the 2007 Decision, the Fund should focus on the broad macroeconomic picture and policy mix with due consideration of a country's specific and unique circumstances in determining the appropriateness of a mem- ber's exchange rate. The Bretton Woods institutions have a responsibility to cushion the effects of the fuel and food price increases on member countries. Quick action by the Fund and the Bank in analysing the impact of these price increases on low and low-middle-income countries, as well as the provi- sion of funding assistance is acknowledged in this regard. To the Fund's credit, the provision of useful analysis and policy advice to the mem- bers through flagship reports such as the Global Financial Stability Report and the World Economic Outlook have been useful. We also welcome the flexibility exercised in the recent modification of the Exogenous Shocks Facility. On the Bank side, we appreciate the progress made in implementing the Global Food Crisis Response Pro- gram to support countries that have been severely affected by the 56 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 57 increase in food prices. We also look forward to a similar response pro- gram to assist countries mitigate the impact of high fuel prices. Nevertheless, I believe more can be done and I am certain that members would prefer much swifter action by the two institutions dur- ing difficult times. As such, we urge the Fund and the Bank to be more flexible during adverse global developments. A review and reform of funding instruments within the Fund and the Bank may be necessary and would be welcomed. Fiji has been affected by the hikes in food and oil prices, but more severely by high oil prices given our heavy dependence on imported fuel. Recent surveys conducted by the Bank attest to this. Our authori- ties have implemented measures to counter the impact of the high prices on sections of the population that have been most affected, but we submit that these measures can only provide short-term relief. As such, we appeal to the Fund and the Bank for technical as well as financial support to alleviate the effects of high commodity prices on small and remote island countries like Fiji. In line with its mandate, we call on the Fund and the Bank to provide assistance in the form of budgetary support that can create the fiscal space and allow Govern- ments to strengthen social protection programs for the most vulnera- ble. To improve energy supply, we seek the Bank's assistance in provid- ing affordable financing and technical advice for projects that support viable long-term energy solutions. In this regard, we call on the Bank to review its position on the financing of a key renewable energy project in Fiji. Poor and developing countries are more susceptible to the impact of climate change, and hence, will bear a bigger burden of the adapta- tion and mitigation costs. As a result, rehabilitation costs of climatic events are sometimes met at the expense of planned developmental programs, which add pressure to government finances. In this regard, we fully support the call for developed countries to take urgent action in contributing to the mitigation and adaptation costs of developing countries. Contribution of financial resources must go beyond the existing envelope of donor assistance for mainstream developmental programs. The World Bank's proposed strategy for climate change pro- vides clarity on its role in expanding financial products and incentives, as well as in building collaborative relations amongst countries. How- ever, the Bank must ensure that its products and programs for climate change take into account the special needs of member countries, par- ticularly those most vulnerable. Reforming the World Bank's governance structure is vital to the legitimacy and long-term viability of the institution. As such, we feel the Bank's unique mandate should be appropriately featured in the reform process. We note the progress made in the last few months and 57 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 58 we support the proposed increase in basic votes to enhance the voting power of developing and transition countries. We also support the establishment of a third Executive Director for the Sub-Saharan African region. In our view, the geographical size and needs of the region justify the need for an additional chair to contribute to Board effectiveness and the Bank's operations in Africa. Allow me to provide an update on recent developments in Fiji. Given our current situation, we are aware that a clear and predictable plan for restoring democracy that is supported by the international community would be an important part of re-engagement. In this regard, I wish to assure you that the Interim Government continues to have effective control over the country. Peace and stability is main- tained whilst positive progress towards democratic elections is being made. The population census is completed, a new supervisor of elec- tions has been appointed and the election boundaries are being reviewed. Combating corruption and promoting good governance remains high on the agenda of the government. We are also in the process of finalising a Draft People's Charter that aims to set a plat- form for broad political and social reforms. All these efforts are geared towards a return to democratic rule. The recent court decision which was in favor of the current Authority will help fast track preparations for the upcoming elections and we hope that it will also facilitate full re-engagement of the Fund and the Bank with Fiji. Fiji's domestic economy is on the mend following a severe eco- nomic contraction in 2007. A modest growth is expected this year and in the medium term. There are encouraging signs in some sectors, including a rebound in tourism and resumption of gold mining. But challenges remain in terms of raising investments and lifting our exports that would strengthen and sustain growth going forward. Man- aging inflation is equally critical in our efforts to maintain international competitiveness. Whilst the increasing commodity prices have made this task difficult, closer coordination between our monetary and fiscal policies will ensure that inflation remains in check. Both fiscal and monetary policies have remained tight and domestic demand has been managed through controls. The resultant stability of the financial sector and reserves levels is testimony to the effectiveness of unconventional methods when the situation demands. However, we will reverse these controls when the situation improves, following regu- lar reviews of their effectiveness. Fiscal consolidation has also seen our deficit and debt levels reduce since 2006, with plans to bring them down further. Mr. Chairman, despite the many odds stacked against us, Fiji has always honoured its debt and major obligations. Fiji's financial system remains robust and is currently insulated from the international financial markets meltdown. We are progres- 58 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 59 sively implementing the findings of the FSAP to strengthen our super- visory and regulatory capacity, and enhance the ability of the financial system to withstand shocks. Furthermore, Fiji has just concluded an Article IV Mission and the results are awaited with enthusiasm. As always, we are appreciative of the policy advice and discussions such Missions generate. Fuel accounts for about a quarter of our import bill and is a drain on our reserves. Demand management is now an important policy aspect for controlling our dependency on fuel and its derivatives and to promote increased efficiencies in our use of these products. Similarly, we are pursuing a number of initiatives to secure alternative sources of energy to reduce our dependency on fuel imports. We appreciate the rationale behind the Fund's reforms relating to charging Technical Assistance, however, the fact remains that for some, TAs and training are the most tangible benefits we derive as members. The process of applying and seeing the TA through is also taxing on members in terms of time and personnel. As a beneficiary of such tech- nical assistance, Fiji expresses concern that charging for technical assis- tance may hinder capacity and institutional building in low and lower middle-income countries, even with the system of differentiated charges in place. We are comforted with the reassurance that if ineffec- tive, the charging policy will be reversed. Nevertheless, Fiji acknowl- edges the technical assistance that the Fund and the Bank have pro- vided over the years. We also appreciate the work done by the IMF Pacific Technical Assistance Centre in Suva and the World Bank Regional Office in Sydney in assisting Fiji and other Pacific Island countries. At this point, I would like to reiterate Fiji's request for a full re- engagement with the Bretton Woods Institutions. As Fiji continues to make concerted efforts towards democratic rule, we believe our devel- opment objectives could be achieved faster with the support of the Fund and the Bank through the provision of affordable financing, par- ticularly, in the face of the current global crisis. Finally, we wish both institutions well in their future endeavours and we look forward to your continuous engagement. FRANCE: CHRISTINE LAGARDE Governor of the Fund and the Bank In this uncertain period with regard to the macroeconomic and financial conditions, the role of the international institutions as cooper- ation fora, at the forefront of which the IMF and the World Bank, is more essential than ever. The IMF, under the leadership of Dominique Strauss-Kahn, has continued to apply its ambitious reform agenda that 59 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 60 we fully support. The agreements found between Member States in the first half of this year on the reform of the IMF quotas and voting shares on the one hand, on the new income model on the other hand, were great achievements. A similar agreement has been reached at the World Bank and provides for enhanced legitimacy and effectiveness of the institution, consistently with its core mandate. One year after the triggering of the financial turmoil, no one can contest that the most urgent obligation falling within the responsibili- ties of public authorities is to restore confidence in financial markets and more generally in the International Monetary System's resilience. In my opinion, the current international conditions make necessary that strong political guidance in the functioning of international institu- tions be ensured and that cooperation among international institutions and among national authorities be strengthened. Maintaining strong guidance for both the IMF and the WB with clear objectives and effective instruments is key The IMF and World Bank have firmly improved the response to their members' changing needs and to tackle the new challenges posed to the global economy in the 21st century. Among the first lessons that can already be drawn from the current financial crisis is that international stability is indeed a global public good. Therefore, decisive actions have to be quickly taken to coordi- nate the different responses convened to mitigate the current financial crisis and prevent future crises to arise. The IMF, with its universal membership, should play its entire role over these issues, and con- tribute to set up a comprehensive approach aiming at strengthening our international financial system. Strengthening surveillance should therefore be on top of objectives. In that respect, we welcome the strong focus held in the Triennial Surveil- lance Review and the Statement of Surveillance Priorities on better inte- grating financial sector and macroeconomic stability issues and strength- ening the analysis of cross-country issues, which clarify IMF's objectives and are a necessary and timely first step in the adaptation and the rein- forcement of the role of the IMF in terms of surveillance. Likewise, we look forward to the effective implementation of the 2007 Surveillance Decision over members' policies, while acknowledging the need to ensure even-handedness and the fact that the assessment of external stability should not be restricted to exchange rate developments. Moreover, another priority should be to adapt IMF instruments to new types of crisis and evolving members' needs. We want to underline here that the global review of IMF lending toolkit must consider simul- taneously the different axes as set out by the Managing Director. First, 60 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 61 an extensive review of the analytical framework must be undertaken so as to address gaps and overlaps in the toolkit and IMF mandate. In this respect, we agree that the IMF lending framework should be stream- lined. Second, we urge the IMF to consider as a priority to put in place a crisis prevention facility aimed at emerging economies, given the risk of the crisis spreading to emerging countries. Third, in order to pre- serve the crucial involvement of IMF in low-income countries, we wel- come the modifications to the Exogenous Shock Facility towards more rapid access and streamlined conditionality. The revised ESF will pro- vide in complement with the poverty reduction and growth facility a full set of adapted instruments to those vulnerable countries the IMF must assist as part of its mandate. Fourth and lastly, the charge and sur- charge and access-level policy must be re-examined. As per access- level, we need to take into consideration the significant growth of many emerging economies. As the World Bank has also increasingly been called on to respond to emergency situations, its policies and processes were developed to meet broader circumstances. The World Bank's new framework for rapid response to crises and emergencies that has been initiated in 2007 gave keys in particular to address engagements in fragile states. This move has been maintained by addressing with strong commitment the global food crisis, by continuing to implement a reformed HR pol- icy providing greater incentives and protection to the staff working in fragile countries and by concluding a fiduciary principles agreement with the United Nations, but it could be enhanced further to improve flexibility, speed and effectiveness. Mitigating the impact of high food and oil prices leads to complement existing financial instruments. In particular, we encourage the World Bank to work on two issues: first the creation of rapid response facilities providing budget support to poor countries facing exogenous shocks complementarily to the reform of the Exogenous Shocks Facility as already considered by the IMF; second the implementation of innovative lending instruments to reduce countries vulnerability : in this respect, a new lending policy could take into account the borrowing space opened by HIPC and MDRI initiatives and study the possibility of implementing conces- sional counter-cyclical loans. Moreover, the efficiency of our institutions and their capability to tackle new challenges has to rely on renewed governance, as far as legitimacy is a key issue to strengthen our policies and decisions. The actual outcome of the quota reform has contributed to the enhance- ment of the IMF governance and provides for a relevant starting point for the World Bank, which has to maintain momentum after the impor- tant agreement reached yesterday. The agreed package represents a significant step forward to further increase the legitimacy, credibility, 61 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 62 and effectiveness of the World Bank. Although a more ambitious reform package for Sub-Saharan Africa would have been preferred by the French authorities, the additional chair for Sub-Saharan Africa is welcome and will enhance the voice of the poorest countries at the board ; in addition, their voting power will significantly increase both in the IBRD and the IDA; and the selection process for the President of the World Bank Group, genuinely merit-based, transparent and open to candidates irrespective of nationalities, is a welcome step. Cooperation among international institutions and national authorities is key for restoring confidence and ensuring the proper functioning of the international monetary and financial system. Appropriate cooperation and coordination is key in period of tur- moil in a global system in order to restore confidence while avoiding overlapping. The IMF contribution to financial stability is essential thanks to its universal membership, its global vision allowing in-depth analysis on the interlinkages between real and market developments and the com- bination of multilateral and bilateral perspectives. The implementation of the Financial Stability Forum's recommen- dations should help solve many of the failures that the turmoil has revealed in risk management, the functioning of financial markets and the supervisory framework. At the EU level, authorities are committed to fully and swiftly implement the FSF recommendations. While implementing those recommendations is urgent, there is also a need to further develop coordination between financial institutions, notably between the IMF and other international financial institutions such as the FSF, through joint initiatives and continuous information sharing. As we agreed in our IMFC session, the Fund shall focus discus- sion, and enhance cooperation, with a wide range of perspectives with the FSF, the G-20, and others on this issue in an inclusive setting. It will need to start this initiative immediately and to report to at the latest at our next meeting. Likewise, based on the close interrelations of national financial markets at the global level, the IMF, along with the G-20, is a very good place for associating all countries in implementing the recommendations that were issued on the international scene and targeted primarily to the more advanced countries. As for the World Bank, we plead for a strategic review of the Bank Group's operations that would highlight its comparative advantages, but also areas where other development institutions should lead the international community. Eventually, relations and coordination between the IMF and the World Bank are to be strengthened, especially as regards the lending 62 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 63 policies to middle-income countries. Stronger coordination is a key issue for insuring a global and consistent response to crisis. This issue calls for a clear vision regarding the respective roles of the IMF and the World Bank. We have to address the question of the limit of their respective actions and the complementarities of their operations. To conclude in a few words, the role of the IMF and the World Bank is more essential than ever for ensuring international macroeco- nomic and financial stability. At the same time, the current conditions further underline the need for continuing implementing their reform agenda. The cooperation between the IMF and the World Bank has always been a core issue for France. I wish it will be strengthened in order to enable both institutions to further develop their legitimacy and their effectiveness. It will allow them to play a central role in build- ing a sounder financial system. GERMANY: HERMANN REMSPERGER Temporary Alternate Governor of the Fund At the current juncture, restoring the stability of the financial sys- tem must be a top priority for policymakers around the world. We should continue to cooperate closely to this end. We commend the U.S. administration for its resolute efforts to reduce stress in the U.S. finan- cial system as the epicentre of the current crisis. The European Action Plan of the euro area countries--set up this Sunday--facilitates the funding of banks, allows for an efficient recapi- talisation of banks and ensures sufficient flexibility in the implementa- tion of accounting rules. These unprecedented measures reflect the severity of the crisis and the willingness to restore confidence and the proper functioning of the financial markets. In the longer term, fundamental questions of financial regulation must be addressed at an international level in order to enhance the resilience of the global financial system. In this context, the ongoing initiatives to globally implement the recommendations of the Financial Stability Forum are welcome and must be sustained. Given its unique mandate and expertise, the Fund has an important role to play in supporting policymakers with its advice and expertise in these times of financial stress. Fund surveillance has benefited considerably from efforts to strengthen the multilateral perspective and financial sector analysis. These efforts must be sustained, along with more candid and system- atic risk assessments. The Fund should also continue its close coopera- tion with the FSF and help members implement the lessons drawn from the financial crisis. 63 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 64 In our view, the Fund's lending framework has proven effective and flexible enough in the past to support members in need. We are confi- dent that this will continue to be the case. Some improvements to the tool-kit, such as a new pure signalling instrument for middle-income countries, should nonetheless be envisaged. The lending framework must, however, remain firmly based on the Fund's fundamental lending principles. These include in particular the concepts of conditionality, balance-of-payments need, and the exceptional access criteria. They are essential to safeguarding the Fund's resources and they have not ham- pered the provision of financial support in times of crisis. We welcome additional efforts to further strengthen the governance framework. There is some room to further raise the efficiency and effi- cacy of the Fund's main bodies of governance. However, their respec- tive roles and responsibilities, as laid down in the Articles of Agree- ment, continue to serve the institution well. We are therefore opposed to fundamentally alter this balance. The financial crisis will dampen growth in many developing coun- tries. This comes on top of the burden imposed by high food and fuel prices. As many of the poorest countries will suffer most from high commodity prices, rapid and workable solutions are called for. We therefore warmly welcome the "Global Food Crisis Response Pro- gram" of the World Bank. We also appreciate the "Energy for the Poor Initiative." It is an effective mechanism to deal with the high vulnera- bility of poor countries. Climate change will impede developing countries' ability to eradi- cate poverty. It is therefore crucial that the International Financial Institutions, within their respective mandates, help find effective and efficient ways of reducing greenhouse gas emissions and mitigating the consequences of climate change. We are pleased to see the recent establishment of the Climate Investment Fund as an important step in this context. Germany has committed about US$900 million to the Climate Investment Fund. We expect the World Bank to play a major role in mobilizing financial resources to contribute to poverty alleviation and economic growth in the context of climate change. As to the Voice agenda, there is now a solid basis for reaching an agreement on enhancing the participation of all developing countries and countries in transition. The Voice reform should take into account results of the IMF reform. We welcome the additional chair for Africa in the World Bank board. And we also welcome the broad consensus to increase basic votes as this will serve best to provide increased weight for smaller countries. Going forward, we believe that a selective capital increase is an appropriate way to ensure that dynamic emerging countries are ade- 64 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 65 quately represented. A meaningful voice reform should also lead to improved participation in formulating and implementing World Bank programs and projects. GREECE: GEORGE ALOGOSKOUFIS Governor of the Fund The global financial system is facing severe problems, which require urgent and exceptional global action. We must continue working together to restore confidence, ease the flow of credit, recapitalize the banking sector, and support global eco- nomic growth. The financial crisis is taking its toll on global growth. All regions of the world have been affected, including the euro area economy. The recent communiqué by the G-7 Finance Ministers and Central Bank Governors suggests a roadmap that will help stabilize financial conditions--if fully implemented. A similar roadmap has been decided for the EU by the latest ECOFIN Council and the recent Euro area summit. Policy makers in the EU have agreed to closely coordinate the implementation of decisions to address the financial turmoil as well as the flexible application of the rules of the Stability and Growth Pact. Greece is gradually experiencing the impact of the financial crisis although developments so far suggest that the Greek economy is show- ing greater resilience than many other European economies. This is indicated by Greece's relatively high growth rates and falling unem- ployment. In the first half of 2008, growth in Greece reached 3.5 per- cent compared to 1.8 percent for the Euro area economy. The Greek financial system also displays greater resilience. However, there is no room for complacency. Fiscal consolidation and the structural reforms agenda followed since 2004 will continue. This is the best shield in the light of the worsening global economic climate. At the same time, Greece is taking measures to sustain the soundness and credibility of its financial system. With its internal reform nearing completion, the Fund is appropri- ately focusing on helping members meet global economic challenges. The unprecedented nature of the global financial crisis has created new policy challenges for the Fund and underlined the need for deeper analysis of macrofinancial links and spillovers. We welcome the new initiatives that are being undertaken. Developing and transition countries (DTCs) make a positive contri- bution in the current international environment. According to the Fund, the expected growth in the global economy is almost solely due to the developing world as advanced economies are expected to 65 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 66 remain virtually stagnant. However, the financial crisis and the high oil and food prices create additional problems for the developing world. The role of the Bank becomes even more significant in these diffi- cult times. Recognizing this, Greece has doubled its burden share in IDA-15. In this difficult juncture, we should all coordinate to restore confi- dence in the international financial system, continue supporting the developing and transition economies, and pursue coordinated policies to facilitate a global recovery. I am certain that we shall all rise to the task at hand. HAITI: DANIEL DORSAINVIL Governor of the Bank It is a pleasure for me to echo the sentiments of my colleagues who preceded me at the podium in congratulating, on behalf of the Haitian delegation, the Secretariats of the Bank and the Fund, for the unequiv- ocal work done to ensure the success of this year's Annual Meetings of Governors, as they have done in previous years. One year ago, we were able to view the future, at least the near future, with a certain degree of optimism. Of course, we could not, and did not, anticipate the various shocks with which we have been hit dur- ing the past fiscal year, namely, price hikes, a food crisis, five months of political uncertainty, a succession of natural disasters that have had a devastating effect on several regions in our country and, at the moment, the financial crisis. Faced with these shocks, like many other countries, we have had to revise downward our growth objective for the year 2007­2008, from 4 percent to 1.5 percent. Last year, while we could not have seen all that lay ahead, in con- gratulating Mr. Dominique Strauss-Kahn on his new position, we did emphasize the importance of reforms in the context of the role of the Fund in low-income countries. Furthermore, while commending the decision of the World Bank Group to allocate US$3.5 billion to the poorest countries, we stressed the need to review the criteria for grant- ing resources to post-conflict countries, given that access to resources based on past performance is punitive. Last year, we expressed regret over the fact that the damage sus- tained by Jamaica as a result of Hurricane Dean had brought to the fore the existence of conditions and criteria that are impeding dis- bursement of resources under the Caribbean Catastrophic Risk Insur- ance Facility. The partial assessment of the catastrophes in Haiti points to close to 800 deaths, 310 missing persons, approximately 200,000 fam- ilies affected by the disaster, and damage to 110,000 homes. This year, we are expressing the same reservations, in even stronger terms, with 66 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 67 regard to our situation. That said, we wish to express our gratitude to the Bank and Fund, as well as to all partners here present, for the sup- port shown to my country when it was put to the test. While we view reform of the IMF's Exogenous Shocks Facility as a step in the right direction, we deem it inadequate. We reiterate our call to strengthen the reforms pertaining to the Fund's role in low-income countries. More specifically, we call on the IMF to take the steps neces- sary to ensure that low-income countries continue to benefit from the full amount of technical assistance they require. This concern is justi- fied by the new contribution policy of member counties to financing assistance in this area. We are cognizant of the Bank's efforts to boost available resources for Haiti. However, given the challenges that we have to tackle, we must point out that an IDA allocation of US$70 million over a three- year period remains small in relation to our work in the areas of devel- opment and poverty reduction. At this juncture, we reiterate our call for additional resources. The tremendous loss of human life and physical capital heavily undermines growth and poverty reduction and leads to greater financ- ing needs. We must provide urgently needed assistance to victims, rebuild our infrastructure, safeguard our environment, rebuild our cap- ital, and restore our productive capacity to pre-disaster levels. National recovery and reconstruction efforts are being curtailed by the paucity of domestic resources. The Government recently managed to mobilize resources on the order of US$200 million to begin the recovery process. However, the reconstruction effort requires much more resources. With the assistance of the World Bank, the European Union, UNDP, IDB, and other partners, we have undertaken a needs assess- ment process, which should soon allow us, in light of recent events, to adjust the sectoral action plans of our Growth and Poverty Reduction Strategy (GPRS). Haiti maintains a committed and steadfast position with respect to medium- and long-term objectives in the areas of devel- opment and governance. Notwithstanding these many shocks, Haiti continues to implement the reforms undertaken in the context of its financial program sup- ported by the Poverty Reduction and Growth Facility (PRGF), and is making strides toward achievement of the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative. Fiscal Year 2008­2009, which started this month, marks the third year of the PRGF, and we expect to reach the completion point in 2009. However, the challenges are daunting. The Government nevertheless intends to forge ahead with the reconstruction of the country and is calling for the support of its part- ners to successfully carry out this undertaking. 67 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 68 INDIA: ASHOK CHAWLA Alternate Governor of the Bank, on behalf of Governor of the Fund and the Bank We meet in Washington at a time when the global economy is under severe strain. The financial sector turmoil that originated in the U.S is now unfolding into a full-blown crisis across many developed economies and possible spillovers to rest of the world. Inflationary pressures arising out of elevated food and fuel prices have not yet fully subsided. The recessionary trend is slowly becoming a reality. After five years of high growth, the world economy is now on a sharply decelerat- ing trend. More than 100 million people may have slipped back into poverty, and our efforts to eliminate poverty have suffered a setback by about seven years. Nevertheless, crises do give us an opportunity to quickly take stock of what went wrong and to act in a concerted fashion--not just to alle- viate the immediate effects of the crisis, but also to create a better world especially for its poor. Global Food Crisis The global food crisis is not a natural catastrophe. It is man made. The fall in world cereal production, low food stock levels, and crop diversion for the bio-fuel sector have played a major role. Add to these, the role of speculation and financialization of commodities, and we have an unprecedented crisis. Some laudable international efforts are underway. However, we need urgent action on rationalizing the biofuels policy. We should also quickly reach agreement on removal of agricultural subsidies; arrive at a successful conclusion of the Doha Development Round; and create the conditions for a more efficient and fair global food trade. The Financial Crisis and the Role of IMF The current crisis and the attempts at its resolution have raised a number of concerns. In developed countries, risk management and supervisory practices have lagged behind the pace of financial market innovations and new business models. I am afraid there will be substan- tial fiscal costs with attendant implications. The Fund's principal mandate is to provide the global public good of financial stability. The Fund attempts to deliver this mandate through two key tasks assigned to it--surveillance and providing the comfort of readily available financing to members. Separate efforts are already underway in several fora. It would be more appropriate to 68 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 69 organize the fragmented efforts on a global scale under the inclusive umbrella of the IMF. Voice Reform in the World Bank Group The ongoing Voice and Participation reform process at the Bank is a great opportunity to make a far reaching reform of its governance structures so that it continues to play a vital developmental role in global economic affairs. We strongly support and call for immediate implementation of an additional Board seat for Sub Saharan Africa. However, we feel that the proposal approved yesterday on the important dimension of `Voice as voting power and shareholding' has failed to live up to the promises made at the Spring Meeting of 2008. While in the interest of consensus, we agreed to the proposals at the Development Committee yesterday, we believe that the efforts now to be made on realignment must lead to substantial and effective enhancement of the individual as well as collective voice of DTCs. Development and Climate Change We emphasize that issues relating to finance and technology are fundamental to the success of any global strategy to address climate change. New and additional resources that do not detract from the ODA must be provided by the developed countries. It is equally impor- tant to transfer clean, environment friendly technology to the develop- ing countries at affordable prices. The basis of international cooperation on climate change lies in the UNFCCC principle of "common but differentiated responsibility and respective capability." There is no escape from the reality that emerg- ing and developing countries will consume more commercial energy. India is committed to evolve and pursue a strategy of environmentally sustainable development. We have formulated our National Action Plan on Climate Change and are committed to ensure that our per capita carbon emissions will never exceed the average of the per capita emissions of developed countries. INDONESIA: BOEDIONO AND SRI MULYANI INDRAWATI Governor of the Fund and the Bank We are meeting at a time of great challenge and risk in the global economy. The global financial crisis, rising commodity prices, and a con- siderable slowdown in global economic growth, are presenting unprecedented challenges in the history of global economy. As this is a 69 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 70 global crisis, we need a global solution. We believe that given their mandates, the International Monetary of Funds and the World Bank must play the leading role in the crisis resolution, provide guidance on the appropriate policy responses, and reshape the works to better assess and prevent future crises. Global Economy and Financial Market The slowdown in the global economy continues to deepen, with the slow growth in both advanced and emerging economies. Risks to growth are firmly on the downside, particularly if the financial condi- tions should deteriorate further and that financial strains would be more intense. Emerging economies are increasingly affected by the spillovers from financial and economic stress in advanced economies, with clear signs of decelerating economic activity and continuing infla- tionary pressures. The immediate challenge is thus for macroeconomic and financial policies to support the recovery and stabilize financial conditions, while keeping inflation under control. Monetary and fiscal policies are very important to anchor inflation- ary expectations and to mitigate negative feedback loops between the financial system and the economy in the near-term. In this regard, we welcome the policy responses in the US to provide support to the economy in the face of financial stress while ensuring adequate liquid- ity to the financial system. Direct fiscal intervention with the use of public sector balance sheet has already taken place in the US and in a number of advanced countries to contain systemic financial risks. Nonetheless, we view that closer and concerted policy coordination, particularly those among advanced economies, is the key to immedi- ately address the liquidity problem in the global financial system and manage the orderly deleveraging process. It will also be critical to con- tinue with reforms to strengthen the financial system. Refocusing the Fund We welcome the efforts of the Fund to identify the underlying causes of these potentially devastating problems. The current crisis once again provides an important lesson that the rapid financial inno- vation without proper market safeguards and adequate regulation and supervision can lead to systemic failures. This clearly calls for a redesign of international financial architecture. Reforms in regulation and supervision of institutions and markets are needed and to be coor- dinated on a global scale to mitigate the risk to global financial stabil- ity. We call on the Fund, in closer coordination with other international fora including the Financial Stability Forum (FSF), to play a leading 70 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 71 role to provide the multilateral platform for discussing and eliciting the appropriate responses. In the short-term, since we are still grappling with crisis, what we need is to move quickly and coherently with more concrete solutions to avoid a global financial catastrophe. To this end, the Fund should be advising members what to do and how best to respond to the fallout from the crisis, how to restore the stability and preventing further spillover effects. We call on the Fund to play a more proactive role in the much needed global policy coordination through its multilateral consultation. Building on its expertise and experience from wide mem- bership, the Fund is better place to provide such policy advices. We also urge the Fund to expedite the new liquidity instrument to help mem- bers better prepared in their crisis prevention framework as they inte- grate into global financial system. The turmoil has posed challenges to policy makers and highlighted the importance of better analysis of global stability risks. In this regard, we commend the Fund's progress to meet its Reform Agenda. We are convinced that the reforms will help the Fund become more efficient in carrying out its mandates and sharpen its focus. On surveillance, we are pleased to note that the Fund will enhance its surveillance on macrofi- nancial linkages and advance its early warning framework. However, in the current global financial crisis, a better integration of multilateral surveillance into bilateral surveillance should also be prioritized. We also believe that the Fund's existing lending instruments are based on a model that is no longer suited to the needs of a large part of the membership. The global financial system has evolved enormously since the Fund was created, and so have members' needs for Fund sup- port. While the Fund has adapted to members' evolving needs, this was not nearly fast enough. In addition to expeditiously concluding the work on a new liquidity instrument, there is urgent need for exploring analytical considerations for Fund lending, re-examining conditionality, reviewing the Fund's lending role in low-income countries, and review- ing access limits and financing terms for using Fund resources. We also welcome the establishment of Committee on the IMF Gov- ernance and Reform. We believe that in addressing global issues, the Fund depends heavily on its capability to establish an adaptive and flex- ible management structure. In this regard, we trust that the Committee would come up with recommendations that benefit all its members. Nonetheless, we must not forget that further addressing the voice and representation of developing and emerging economies remains one of the key issues on IMF Governance reform. We call on the Fund to make further progress in closing the gap between actual and calculated quota shares to reflect their relative positions in the world economy. 71 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 72 Strategizing the Bank The current global challenges also call for the central role of the World Bank. We need to mitigate the spillover risks of continued high commodity and food prices to development agendas. Higher inflation reduces the capacity to advance important development goals. In some extreme cases, it might undo many of the achievements of the past decades and push more people into poverty. We believe that the Bank is well positioned to lead a coordinated global effort to tackle these problems. Looking beyond the crisis, we support the Bank's efforts to achieve its Long-term Strategic Direction. We believe the Strategy provides a better mechanism for aligning aid with national development strate- gies. We appreciate the increasing role of Country offices to maximize the Bank's understanding of client countries. We are heartened that the Bank remains committed to a leading role in advancing climate change efforts. We also applaud the Bank's for assisting developing countries to access and maximize the benefits of various financing schemes. The Bank is well positioned to act as a catalyst in the efforts to increase the private sectors' climate change role, as well as facilitating technology transfers. We believe that tackling corruption and improving transparency both at an international and country level is a fundamental condition for ensuring a sound path for development. We note that together we could do more to implement the Stolen Asset Recovery (StAR) Initia- tive. This important project needs concrete and collective efforts to investigate, trace, and repatriate stolen assets. A coordinated effort would help rid the globe of safe havens for stolen assets. We encourage the Bank to continue with efforts to advance struc- tural reforms and to increase the voice and role of developing countries. This should include efforts to increase representation of staff from developing countries in the senior management ranks and to empower all members to participate in the leadership selection process. Responding to the Crisis--Indonesia's Experience In closing, we reaffirm Indonesia's commitment as a solid and reli- able partner of the Bank and the Fund. We continue to do our part to mitigate the spillover risks of the unfolding crisis into the emerging markets. We have so far been able to withstand the negative impact of the global crisis, thanks to our prudent macroeconomic policy, strength- ened financial sector, and adequate foreign exchange reserves. Nonetheless, this is a challenging task, particularly given the increasing trade-off between inflation and growth while preserving financial sta- 72 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 73 bility. In this context, we have taken measures to adjust the economic policy mix to reduce inflationary pressure while maintaining financial stability and growth momentum. On the fiscal front, in order to secure fiscal sustainability and at the same time allow the needed fiscal space, we have moved forward towards more streamlined subsidies accompanied by well-targeted social transfers as well as reinforcing expenditure restraints. On mone- tary front, the central bank has preemptively raised its policy interest rate to curb inflation expectations and the second-round impacts of domestic fuel price increase, while at the same time ensure sufficient liquidity in the financial system. Going forward, we will press forward our effort to enhance our crisis management framework, including our plan to strengthen legal aspects of the crisis management and protocol that outlines procedures and clarifies the responsibility of agencies. IRAN: SEYYED SHAMS AL-DIN HOSSEINI Governor of the Bank In the name of Allah, the Compassionate the Merciful. It is my pleasure to address the 2008 Annual meetings of The World Bank Group and IMF. The global economic outlook has continued to deteriorate with sev- eral advanced economies bordering on recession; in particular the recent turmoil in the United States financial market has impacted most of the markets worldwide. At the same time, developing and emerging market economies are struggling with rising costs and weakening of external demand, while low-income countries are suffering from high commodity prices. The financial outlook is now subject to greater uncertainty and despite some remedial measures recovery could not be expected soon. This is a great challenge that will have significant bear- ing on the world economy and which needs to be dealt with in a con- certed and well- thought manner. It is surprising that the IMF has not foreseen this tremendous finan- cial turbulence in order to send an alerting signal in timely manner. This would have been particularly critical, given the extent of the crisis and its global spillover. Going forward, considering its mandate to overlook the global financial stability, the IMF needs to play a more effective role in helping shape the policy response not only in the developing countries but also in advanced economies in order to safe- guard emerging markets sustainable growth and financial soundness. On the issue of the Voice and Representation of DTCs I believe that: First, the major source of income and knowledge of the World Bank is generated from cooperation with developing countries. There- fore, in order to enhance its legitimacy it should move according to a 73 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 74 defined timetable toward the parity of voting power between DTCs and developed countries. Second, we emphasize that in implementing an increase in the vot- ing power of the DTCs, this increase should be formulated in a way that would not dilute the voting power of any single member of devel- oping and transition countries. Third, we strongly support a selection process of IMF Managing Director and the President of the World Bank that should be fair, competitive, merit based and open to individ- uals from all member countries. We are also of the opinion that the Bank and the IMF should take more serious measures to enhance staff's diversity in both institutions, particularly at higher managerial levels from all member countries. Finally, in order to enhance its image as an impartial and unbiased multilateral institution, the World Bank management should engage with all its developing country members through its country assistance strategy and investment in their development projects which must be considered solely on the basis of their economic merits. In this context the World Bank must restrain from being influenced politically which is against the stipulations of its Article of Agreements. In this direction, we strongly urge the Board of the World Bank to follow up this matter as part of its governance mandate. On the issue of climate change, the role of advanced economies that are mainly responsible for this phenomenon is highly significant. Therefore, they should justifiably bear the main costs and burden for the adaptation and mitigation to climate change in the developing countries which need to sustain their economic growth and develop- ment in order to reduce poverty, and which cannot afford additional high costs of new technologies. Therefore, developed countries that picked the fruit of development and prosperity at the expense of cli- mate change should bear their differentiated responsibility in this process and provide the necessary additional financing and new tech- nologies to developing countries at low cost. The neutrality of the sup- porting multilateral institutions is fundamental for the success of this process. Next, I wish to touch briefly on the recent economic development in my country. Growth continued to be strong despite some external constraints and unemployment declined in spite of the rapid growth of the labor force. Real GDP expanded by 7.6 percent in 2007. In addition, privatization has gained momentum with a rapid increase in the purchasing shares by private investors. In this direction, following the reinterpretation of Article 44 of the Constitution, about 80 percent of state-owned enterprises will be privatized by 2010. 74 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 75 For the medium-term the government plans to implement a strat- egy that involves significant reforms, the most important of which is the reform aimed at better subsidy system. IRELAND: MARTIN MANSERGH Governor of the Fund and the Bank I am pleased to attend here today to speak on behalf of Ireland. We meet against a backdrop of extreme global economic and finan- cial uncertainty with continuing downside risks to the global economy. More than ever now, it is important to have a strong IMF and World Bank Group, working in co-operation with their members, to promote global economic growth and stability. We must ensure that progress made in recent years towards achieving the Millennium Development Goals is not reversed. IMF Reforms Ireland welcomes the progress made in the past year in refocusing and reforming the Fund. We support the Managing Director's ongoing commitment and efforts to implement the reform agenda set out in the Medium-Term Strategy, which should see the IMF continuing to enhance its role and credibility in the global economy. Surveillance IMF Surveillance is particularly important in current economic con- ditions. The key challenge for the Fund is the effective implementation of all the provisions of the 2007 Decision on bilateral surveillance-- including the use of the ad-hoc consultation procedure. We join with others in calling for effective and even handed implementation. Irish Developments I would like to turn briefly to developments in Ireland. Ireland has taken swift and decisive action to safeguard the stability of our financial system and more broadly our economy. Two weeks ago, the Irish Government decided to put in place a guarantee arrangement to safeguard all deposits with and loans to six named credit institutions. The guarantee arrangement will also be available to certain banking subsidiaries in Ireland that have a significant presence in the domestic economy. This approach has now been approved by the European Commission. Ireland also strongly welcomes the interventions of other 75 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 76 European Member States and countries worldwide to ensure stability within the financial system. Actions by individual countries and by other groupings--such as those announced by the Eurogroup Heads of State and Government on Sunday night--are crucially important in ensuring that policy makers can go beyond a reactive approach to the difficult market circumstances. Ireland is continuing to work with other EU member States, the Commission, and the European Central Bank in the work to find an overall framework to address the financial crisis. The Irish economy is currently being subjected to a number of neg- ative shocks. On the domestic front, a major adjustment is underway in the residential construction sector, and this has dragged down eco- nomic activity this year. The more difficult external climate is having an additional detri- mental effect. Weak demand in our main export markets, exchange rate appreciation, the fall-out from global financial market turmoil and, notwithstanding some easing in recent months, higher commodity prices are all having an adverse impact. The latest data confirm that the economy has slipped into recession and for this year, we now expect the level of activity to contract. The contraction in activity has been mainly concentrated in the higher yielding components of demand, with the result that there has been an accelerated deterioration in the public finances. To deal with these challenges, the government brought forward the normal date of our national Budget from December to tomorrow. The Budget will set out steps to stabilize the situation by strictly prioritizing expenditure to reflect the changed realities and to ensure that Ireland's economy is in the best possible position to resume trend growth as international conditions improve. Development and Aid On development and aid issues, Ireland's contribution in recent years has increased substantially. This year, we will spend around 900 million euro on overseas aid. Proportionately, this makes Ireland the sixth largest donor per capital in the world, and represents 0.56 percent of GNP. Ireland's aid program has always focused on the poorest and most vulnerable.This focus will continue. Ireland welcomes the outcome of last month's High Level Forum on Aid Effectiveness, in Accra, Ghana. The Forum reached agreement on accelerating and deepening the implementation of the 2005 Paris Declaration on Aid Effectiveness. The Accra outcome is a strong state- ment on the need to improve the deployment and delivery of develop- ment assistance. We join with others in commending the World Bank 76 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 77 for their contribution to the Forum, and we are confident that the Bank will fully play its part in implementing the agreed actions. The constructive work carried out at the Accra Forum to improve the quality of aid is a solid foundation for the Doha Financing for Development Conference in November, when aid volumes and the 2002 Monterrey Consensus will be under scrutiny. Again, the World Bank will play a key role in the Doha discussions, particularly in light of the current global economic conditions. Debt Relief Ireland strongly supports debt relief for poor countries with unsus- tainable burdens. We remain committed to total debt cancellation for the HIPC countries. In this regard, Ireland has recently made an addi- tional contribution of 6m to the HIPC Initiative as an indication of our continued support for the world's poorest countries. However, there is a danger that countries which benefited from HIPC and the MDRI will re-accumulate unsustainable levels of debt. Beneficiaries must therefore be encouraged not to engage in unwise nonconces- sional borrowing. Donor countries wish to see debt relief used well in making progress towards the achievement of the Millennium Develop- ment Goals. Every effort should be made to ensure that progress made is not reversed. Voice and Participation Following the reform of Quota and Voice at the IMF earlier this year, Ireland supports the current reform process in the World Bank, aimed at widening and strengthening the participation of developing and transition countries in the decision-making of the Bank. We congratulate the Bank for its commitment to this issue, in keep- ing with the spirit of the Monterrey Consensus and indeed with the Accra Agenda for Action, and we commend the progress that has been achieved this weekend. We welcome this progress as an important first step in the ongoing process of comprehensive reform. In conclusion, I would like to refer to the contributions made in this morning's opening session. We should all be encouraged by the addresses of Managing Director Strauss-Khan and President Zoellick. These demonstrate a proactive approach by both the Fund and the Bank to developing an effective global response to tackle the effects of the shocks that have hit the world economy, and the discussions of the last three days. I can assure the institutions of Ireland's full support for these efforts. 77 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 78 ISRAEL: ZVI ECKSTEIN Alternate Governor of the Fund Unfortunately, Governor Stanley Fischer could not be present here. It is a special pleasure for me to be here today to deliver this address on his behalf, and on behalf of the State of Israel. I would like to make brief comments on two issues: first, the Israeli economy; second, the Fund's Reforms and Policy Agenda. The limited time available will not allow me to cover other important topics, including global economic developments, especially in light of financial market turbulence, the implication of the current energy and food prices on the poorer countries and communities that are not endowed with such resources, and other important issues such as climate change. The Israeli Economy Since 2004 and up to the first quarter of 2008, the Israeli economy has been growing at an average annual rate of more than 5 percent. In the second quarter of 2008, GDP growth decreased to approximately 4 percent. Given financial turbulence, global slowdown, and the strength- ening of the Shekel, further slowdown is expected in the remaining part of the year and in 2009. The Israeli economy is affected, like the rest of the world--by the substantial increase in uncertainty in the global financial markets. In Israel, the economy, in general, and the financial sector, in particular, is in good condition in order to address the possible ramifications of the crisis. Relative to banks in the US and in Europe, the Israeli banking sector is conservative and its exposure to the financial turmoil in the US and Europe is limited. I will briefly review recent macroeconomic developments in Israel. In 2008, mostly as a result of significant increases in energy and food prices in the first half of the year, inflation is expected be above the target range (1-3 percent per annum), but inflationary expectations for the next 12 months are within the target range and inflation is likely to return to the target range in the second quarter of 2009. The balance of payments is expected to be in 2008 in a surplus of around 1 percent of GDP. Controls on capital flows have been removed progressively since the early 1990's, and the capital account is essentially totally liberalized. On March 24, 2008, the Bank of Israel announced a plan to increase its foreign exchange reserves by purchasing foreign currency in the open market. With effect from July 10, the Bank purchases an average of $100 million a day. This decision was made following an examination 78 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 79 of the market conditions and in light of the rapid cumulative apprecia- tion of the shekel. The government debt ratio is on a declining path, yet it still remains too high and needs to be reduced further; government spending has been consolidated and needs to be further reduced; unemployment went down to 5.9 percent in the second quarter of 2008, and more needs to be done to improve the standard of living of the poorest members of the population. On May 2007, the OECD Ministerial Council Meeting decided to start the accession process with five countries, including Israel. Follow- ing this decision, Israel is now engaged in a dialogue with the organiza- tion, and expects to become a full member of the organization in 2010. The process entails updating legislation and adapting to the Organiza- tion's advanced standards. It would also serve as an incentive for Israel to continue promoting economic reforms. At present, we are continuing to work on a new and modern central bank law that will clearly define the independence of the Bank of Israel, while increasing its accountability and transparency. The Fund's Reforms and Policy Agenda The Fund invests substantial energy in reexamining its role, advanc- ing the surveillance agenda, reviewing lending instruments, and strengthening governance. As part of a re-organization, the IMF has cut spending and the numbers of staff, and highly qualified new profes- sionals have been nominated to senior positions. First, we welcome the Fund's sharper focus on refocusing its surveil- lance work. We, as other central banks, have found the Fund's fiscal pol- icy analysis helpful. The overall quality of Fund's surveillance is held in high regards. These days, the obvious demand around the globe is for additional value added in the analysis of the financial sector. Needless to say, the Fund's FSAP work in identifying financial vulnerabilities has had a substantial contribution, but there is value in further work on risk assessment and early warnings. The 2008 Triennial Surveillance Review Paper (prepared by the Fund's Strategy, Policy and Review Department and discussed in the Board on September 26) states that there is a large unmet demand for analysis of financial sector issues, exchange rate analysis and external stability risks, as well as of the of two-way trans- mission channels between financial and real sectors, and cross border spillover effects. We support the recommendation of the report. It is valuable to increase efforts in developing a framework of a more sys- tematic macrofinancial surveillance. In addition, it is important to adopt further steps in order to speed up the completing of Article IV reports and to increase its use of interim reports. 79 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 80 Second, regarding the design of new lending instruments, such as the Rapid Access Line, the Financial Stability Line and the Rapid Liq- uidity Line, I would like to note that there is indeed value in introduc- ing credit facilities to countries with sound policies, without the tradi- tional conditionality structures. It is desirable that such facilities would be available to increase access to contingent liquidity instruments in order to assist member countries to reduce the risk of capital account crisis and assist those qualifying after being hit by turbulence in global capital markets. Third, the Fund is an effective international organization that is in the process of improving its governance and accountability. It is impor- tant that member countries' authorities will benefit from the continued relevance of the IMF, especially for global financial issues. Such rele- vance is also tied to the issue of vote and representation. In order to reflect the current global economic situation, new economic powers deserve a bigger weight in the decision making process. With respect to low-income countries, the increased desire for vote should be balanced by the implications of increasing the weight of borrowers in any lend- ing financial institution. Before I conclude, I would like to make another point regarding the global financial crisis and state that during this critical period in the so- far ever-worsening crisis, government policy needs to be guided by two central principles: central banks need to ensure that sufficient liquidity is provided to the banking system and the money and short-term credit markets to ensure their continued effective operation; and govern- ments need to stand ready to inject capital into their banking systems to ensure the stability of the system and the continued provision of credit to the economy. JAPAN: MASAAKI SHIRAKAWA Alternate Governor of the Fund and the Bank It is my great privilege to have this opportunity today to address the IMF-World Bank Annual Meetings, representing the government of Japan. At the outset, I would like to express my sincere appreciation to Mr. Dominique Strauss-Kahn, Managing Director of the IMF, and to Mr. Robert B. Zoellick, President of the World Bank, for their excellent leadership at their respective institutions. The World Economy and Global Financial Markets The financial crisis that erupted in August 2007 appears to have become even more profound today. Credit quality concerns are broad- 80 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 81 ening, as further declines in house prices and tighter lending conditions spread across countries, most notably in the United States and Europe. Financial firms face greater difficulties in raising capital to cover losses, while efforts to squeeze assets add to downward pressures on asset prices. Recent developments in the U.S. financial industry have led to a considerable deterioration in market participants' sentiments. Although the decisive measures adopted by the U.S. authorities have prevented the global financial system from further disruption, signifi- cant uncertainty remains regarding the way forward. We, as policymak- ers who have the responsibility of dealing with global financial issues, should use the term "crisis" with utmost care, but it would be difficult to blame anyone for describing the current situation of the world econ- omy as a "financial crisis." Presumably not independent from the financial turmoil, commodity prices have demonstrated very volatile movements over the past year. The price of oil more than doubled between December 2006 and mid- July 2008, before easing in recent weeks, while, during the same period, food prices rose by over 50 percent. Although commodity prices have recently leveled off, underlying inflation has risen, particularly in emerging and developing economies. The tightening of policy rates in some emerging economies is consid- ered to have been behind the curve. Implementing policy responses to inflationary pressures from exogenous shocks will be quite challenging, given weaker growth prospects throughout the world. Against this backdrop, the world economy is likely to display a marked slow down. Not only are advanced economies expected to go through a period of very sluggish growth for the remainder of 2008, but emerging and developing economies are also projected to continue to slow. Hence, it would be advisable that we prepare against a "global recession." We should also bear in mind that the global credit contrac- tion arising from the present financial turmoil could increase the risk of squeezed private capital inflows to emerging economies. Considering the situation I have just outlined, I believe that now it is a time when the resilience of the international financial system as a whole, as well as the policy responses of individual countries, requires thorough scrutiny. We believe that Japan can contribute to the stability of world econ- omy by pursuing to secure its own growth. On August 29, the govern- ment announced a package of measures to address the global surge in commodity prices, and a supplementary budget to implement these measures has just been passed by the Lower House of the Diet. Mone- tary policy continues its accommodative stance. In response to elevated strains in the global financial market, the Bank of Japan, with other 81 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 82 central banks, has taken coordinated action to provide U.S. dollar liq- uidity, and it has supported interest rate cuts implemented by other major central banks. The Bank of Japan intends to carefully assess its outlook for economic activity and prices, while closely examining the likelihood of its projections as well as the upside and downside risks, and to implement its policies in a flexible manner. Since the situation in the international financial markets has an enormous influence on the Japanese economy, we will very attentively watch global financial developments and put forth our utmost efforts to maintain the stability of the international financial system. Expected Role of the Fund Let me turn to the question of the Fund and expectations regarding its role. In the midst of concerns about the financial crisis and a global recession, recently, it has often been questioned whether the Fund properly fulfils expectations. We have some concerns that, in response to this criticism, the analytical and advisory capacity as well as the pol- icy tools of the Fund might be scaled back, despite a genuine demand for them, from the international community. I would like to offer some proposals regarding possible ways in which the Fund can fulfill its expected role. First, the Fund can make an intellectual contribution to advanced economies affected by the financial crises. The Fund is well situated to accumulate the expertise of member countries on how to respond to financial crises. It is therefore important that the Fund build up and organize member countries' existing experiences and provide effective input to those countries currently fighting against a financial crisis. The Fund should also improve its ability and capacity to analyze financial market issues, and to accelerate its ongoing efforts toward enhancing integration between the analyses of financial markets and the macroeconomy. Second, there is room for intensifying the Fund's engagement with international financial crises. Addressing global financial crises, and helping member countries cope with those crises, both lie at the heart of the Fund's raison d'etre as an international institution. When emerg- ing economies and smaller countries that host large financial institu- tions implement such measures as providing capital to financial institu- tions and deposit guarantees, to ensure the stability of financial systems in the midst of a crisis, these countries are likely to encounter difficul- ties in financing their budgetary needs. The Fund should be responsible for providing financial assistance in such cases, and should seriously consider how to fulfill this responsibility. It does need to convey to the market the Fund's determined commitment to tackle against spreading 82 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 83 financial stresses, and thus, have a positive impact on restoring confi- dence. If the Fund requires additional resources, Japan stands ready to supplement needed funds. Third, the Fund needs to prepare for reduced access to private capi- tal by both emerging and developing economies. As international inter- mediation falters as a result of the global credit crunch, such a situation may arise as thinner private capital inflows to emerging and developing economies leads some countries to face balance of payment difficulties. The Fund should vigorously examine how effectively it can fulfill its role and consider possible regimes of international cooperation for those countries. Fourth, technical assistance is the Fund's area of unique competence. Indeed, from a mid- to longer-term perspective, capacity building of developing countries in the macroeconomic policy field is critical toward achieving economic growth and stability. Japan, for its part, has been expanding its financial contributions to the Fund's technical assistance programs through the Administered Account for Selected Fund Activities--Japan, and will continue to extend its support for Fund oper- ations in this area. We believe that it is indispensable that technical assis- tance programs be mutually beneficial and offer a tangible outcome for both recipients and donors.To this end, particular importance is attached to achieving an objective ex-post evaluation, with specific attention toward ensuring accountability to taxpayers in donor countries. Development Issues and the World Bank A global tightening of credit triggered by the subprime mortgage crisis could lead to shrinking private capital flows to developing coun- tries, thus putting at risk the mobilization of resources necessary for infrastructure investments that support economic growth, indispensa- ble for poverty reduction as well as for the provision of social safety nets. We expect the Bank to actively contemplate how the Bank, and Regional Development Banks, could compensate for the decline in pri- vate capital flows that have been the primary funding source for devel- oping countries, and what kind of catalytic roles the World Bank Group could play in bolstering withered private capital flows. At such a critical juncture, on October 1, the "new JICA" was launched by merging the JICA and the overseas economic cooperation operation of the JBIC. This marks a creation of one of the largest bilat- eral aid agencies equipped with providing all three aid modalities: tech- nical cooperation, grants, and ODA loans. Facing the risk of shrinking financial flows to developing countries, Japan expects that the Bank and the "new JICA" will make their aid more effective and efficient and produce robust results by means of an exchange of best practices 83 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 84 and know-how, and its close coordination and cooperation. In fact, at this year's TICAD IV, good cooperation was already established in the broad area of aid for Africa. Also, in the global efforts to tackle the pressing food and climate change issues confronting the international community, Japan would like to strengthen even further its cooperation with the Bank. Regarding governance reform at the Bank, we welcome the pro- posed comprehensive package that envisages a phased implementation of reform measures. The steady implementation of the measures in the package is critical to the success of the reform. Conclusion The world economy is experiencing a period of rapid change. Developments in the financial markets of one country are almost instantaneously transmitted to the financial market of other countries. Moreover, the factors that influence financial markets are increasing their tendency to affect the real economy through a so-called "negative feedback loop." In such a world, no country can maintain its prosperity without thoughtfully considering the health of the global economic sys- tem. Today, we hear many observations indicating that the Fund and the Bank need to be fundamentally reformed or that they should do much more to cope with the current new environment. These observa- tions, however, can be interpreted as proof of continued high expecta- tions for the two Bretton Woods institutions. Japan hopes that the Fund and the Bank will live up to those high expectations by fully utilizing their splendid human resources. KIRIBATI: NATAN TEEWE, MP Governor of the Fund and the Bank (on behalf of the Federated States of Micronesia, Kiribati, Marshall Islands, Samoa, Solomon Islands and Vanuatu) Warm greetings from the Pacific. It is a great honor for me to deliver a statement on behalf of the Pacific Constituency comprising the Federated States of Micronesia, Kiribati, the Marshall Islands, Palau, Samoa, Solomon Islands and Vanuatu. Our member nations, with a population of over 1.2 million people, are scattered over several thousand kilometers of the Pacific Ocean. They are different in a lot of ways but they do also share a lot of com- mon economic features. They have common problems of isolation from the major markets; they have narrowly based economies and they are very vulnerable to the impact of climate change. 84 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 85 We meet here at a time of great uncertainty. The current financial crisis, coupled with the soaring food and fuel prices, that pose a threat to economic stability world-wide, has also a great negative economic impact in our region. We are already feeling the pressure of these events, which could undermine the gains made through programs of reform. These events have placed considerable hardship on our people. Over the years, we have been undertaking wide ranging reforms to build our economic strength. Whilst the process has been slow for some, generally we have moved forward. To achieve great economic growth we have to take advantage of our disadvantages; we have to be accountable to our people and we have to manage our resources to the best we can. We view economic growth not so much in terms of increase in GDP numbers, but more in terms of providing a better life for our people, now and in the future. Unemployment has been a problem in our region. We have to look outside our individual countries for job opportunities for our people. We are grateful for the opportunities provided by our developed part- ners. I would like to mention the Recognized Seasonal Employment Scheme initiated by the New Zealand Government. Not all our mem- bers are involved under the scheme. However, for those who are involved, the scheme has created the opportunity for employment in New Zealand for a limited duration. People employed remit a portion of their income to their families in their respective countries. The scheme has a positive development impact to the lives of many fami- lies, as well as to the individual economies. Still its initial stage the scheme has its problems, but no doubt and through time, things will improve. The Australian Government has announced the development of a similar scheme. We are anxiously looking forward to the imple- mentation of it. We pray that in the very near future other developed countries will develop similar schemes to assist those of us who are by our very nature, unfortunate. With telecommunications, there have been significant efforts Pacific-wide to open up the telecommunications sector after years of monopolistic regimes. Given our isolation and scatteredness over a wide area of ocean, an efficient and affordable telecommunications system, would encourage private sector investment which will in turn, contribute to our economic growth. Air transportation, for some if not all of us, needs a lot of improve- ment. The significance of tourism to our economies requires efficient airline operations that offer improved connections. Something more than just a regional approach may be required. Developed countries in the region may be in a position to offer an answer with the support of our development partners. 85 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 86 Climate change has been our chorus in our region and it will con- tinue to be our chorus in the future. It is our chorus because we are the most vulnerable to its negative impacts. We are the least contributors to green house gas emissions, but we are the worst affected to the extent that some islands may disappear for good as a result of sea level rise. Climate change is an issue of critical importance to our region, in particular the low lying atoll countries. While we support the Bank's engagement in climate change, we at the same time pose a question, "Is that enough to answer our worries?" When will be the time to put our pens down and start with tangible work to reduce the negative impact? Why are we scaring our people with problems of climate change and not assist them resource wise, to counter the realities of climate change that they are facing? We wel- come the establishment of the Climate Investment Fund and the emphasis on adaptation and renewable energy sources, but we still have to see how effective these funds are in overcoming our worries. With the rise in oil and food prices, we are faced with the serious challenge of dealing with widening external and internal imbalances. With such increases, our people barely cope with their family needs, in terms of food, electricity, transportation and so forth. There is growing signs that our people are facing hardship and are beginning to demand for some form of relief. After years of being neglected (and excuse me for saying that), we welcome the increased Bank involvement in our region through the Sydney Office, establishment of the country office in Solomon Islands, and satellite offices in Tonga, Samoa, and the placement of Bank staff at the Pacific Financial & Technical Assistance Centre (PFTAC) office in Fiji. We believe that, with those arrangements the Bank's under- standing of our particular needs will be enhanced and hopefully will improve the Bank's response to those needs. We are aware that the next Regional Framework is in its final stage and will be ready soon. We would again like to reconfirm our prefer- ence for increased analytical work and more strategic focus at the country level. We look forward to being closely involved in the consul- tations and the formulation of the next Pacific Strategy. Regional initiatives present the opportunity to deliver assistance to benefit a number of recipients, which might otherwise be less cost effec- tive to deliver on an individual basis. High transaction cost of doing busi- ness given our small size, small population, and islands scattered across a vast area make regional and sub-regional approaches much more attrac- tive. We have regional entities working well to serve the interests of the Pacific. We have the Pacific Plan, which has been endorsed by Pacific Leaders, as a source of ideas on regional priorities. And we have the Fund and Bank engaged in the Pacific.Yet there seems to be little practi- 86 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 87 cal partnership taking place in support of regional initiatives. We believe there are opportunities for real impact to take place with improved col- laboration. I therefore urge the Fund and the Bank Group to coordinate their programs closely with the Pacific Plan initiatives to ensure comple- mentarity and deliver optimum outcome. Private sector development has been propagated as the engine for economic growth. In our region, private sector growth has been disap- pointing. We believe we have created a favorable environment and put in place appropriate governance structures and best practices, but there are only a few businesses established and not many foreign investors show interest. The 2009 Doing Business Review ranks most Pacific countries below 100 with the best performer at 39, yet there is no posi- tive reward in terms of new investments. We want to understand the missing part of the puzzle and we believe the Fund and the Bank Group should assist us with better analytical work and realistic advice. We welcome the progress made on voice and quota reform in the Fund and we always believe that the interest of all members should be accommodated. To ensure that we are not left out the Bank should serve us at the ground level by providing an improved Bank-Country relationship, an improved standard of service, an improved Bank Man- agement accountability and an innovative approach to promote Bank exposure to under represented regions. We appreciate the way small states are treated in the IDA15 frame- work. The proposed resource allocation to reflect our special situations is a step forward. The increased IDA resources to the Pacific countries will help a lot in achieving our Millennium Development Goals within the stipulated timeframe. Mr. Chairman, I would like to conclude by acknowledging on behalf of the Pacific Constituency, the improved collaboration we now have with both the Fund and the Bank Group, and we look forward to a continued meaningful partnership and practical outcomes that will help raise the quality of life of our people. KOREA: MAN-SOO KANG Governor of the Fund and the Bank It is my great pleasure to join you here on behalf of the Republic of Korea. Today, the world economy and global financial market are in grave difficulty. Given the close linkage between financial markets and the real economy that we are now observing, our priority should be to stabilize the financial market. To this end, it is important that we restore market confidence before the on-going financial market turmoil develops into a "Confi- dence Crisis." 87 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 88 Policy-makers should enhance predictability in the market by pro- viding transparent and objective information and sending consistent policy signals. In particular, policy coordination and information sharing between member countries are critical in stabilizing the closely inter-linked global financial market. Drawing upon our experience of the Asian financial crisis, I would like to make two suggestions. First, policy-makers should take swift actions sufficient to stabilize the market when necessary. In this context, I fully support the decisive and timely market- stabilizing measures including liquidity provision and interest rate cuts. We should not forget, however, that emerging and developing economies are suffering the most from the turbulence in financial markets. To ease their burden, I would suggest global market-stabilizing measures, such as liquidity provision, engage emerging and developing economies through close coordination. To facilitate policy coordination, I look forward to G-20 taking a stronger role. Given its comprehensive membership consisting of both developed and developing economies, G-20 can be an effective plat- form for global collaboration. Second, regarding the role of IMF amid today's uncertainty, I have three points to make. ˇ the Fund has a bigger role to play in this unstable financial market. It should help the global economy address current turmoil by strength- ening its surveillance. Specifically, the Fund needs to help member countries enhance the financial supervisory system in response to the evolving situation in financial markets. Objective and transparent evaluation and disclosure of the risk inherent in new financial products, will enable us to minimize sys- temic risk and regain investor confidence. ˇ the Fund should focus its analysis on the macrofinancial linkage by fostering the capability to identify and analyze the spillover process and its risk. Going further, it needs to make recommendations on macroeco- nomic policies including the counter-cyclical role of fiscal policy to revitalize investment and consumption in the context of slowing growth. ˇ the development of regional surveillance and crisis management sys- tem and its coordination with the IMF are critical to effectively address the current financial crisis. 88 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 89 In Asia, for example, the CMI Multilateralization, which is to establish regional liquidity providing system, can be a desirable com- plement to the IMF. As for the real economy, it is important that all member countries cooperate to stabilize oil and other commodity prices and, thereby, mit- igate worldwide inflationary pressure. To this end, commodity-exporting countries should stay away from "export protectionism" and maintain an adequate level of supply. On the other hand, developed countries need to take appropriate actions to stop speculative demand from driving up prices. Turning to the on-going World Bank reform, the ultimate goal of governance reform is to enhance the Bank's responsiveness and maxi- mize members' participation by ensuring their equitable representation. The first and foremost principle of the reform should be to ensure that the share structure reflects each member's relative weight in the global economy. It has been a decade since the Bank realigned its quota in 1998. The current quota does not fairly reflect the status of emerging and dynamic countries whose economies have experienced significant changes. That explains the urgent need for a quota reform, especially for the countries whose quota falls far short of their economic position. I am confident that the reform will in turn contribute to achieving the Bank's mandate as it will promote participation by member countries. Last but not least, I urge you to support North Korea, one of the least developed countries in the world, in opening up its economy and reforming itself. To encourage North Korea's opening and reform, it is important to integrate the country into the global community. This will be a challenging task, which requires the efforts of both Koreas as well as the cooperation of the international community. In this regard, I would like to emphasize that the forward- looking stance of the IMF and World Bank is essential. Once again, I ask for the support of all member countries. LAO: VIENGTHONG SIPHANDONE Governor of the Bank It is my honor and a great pleasure to represent the Government of the Lao People's Democratic Republic at the 2008 Annual Meet- ings of the Boards of Governors of the International Monetary Fund and the World Bank. Let me join my fellow Governors in congratulat- ing Mr. Chairman, the President of the World Bank, the Managing 89 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 90 Director of the IMF, and the Government and people of the United States for the excellent arrangements made for this important meet- ing. I would also like to take this opportunity to express my congratu- lations to President Zoellick for continuing his fruitful work in enhancing the World Bank's role in supporting poverty reduction of all regions in the world, regardless of the gloomy economic situation in the United States and around the world recently. Although, the Lao People's Democratic Republic is not directly affected by the sub-prime mortgage crisis in the United States, we share the concern that this crisis could develop into a global financial meltdown, and are greatly concerned about the potential effect on emerging countries and poor countries. We urge the U.S. Government and other industrialized countries to implement all possible measures to remedy the situation and to restore the investors' confidence in the financial market. I would like to take this opportunity to describe the Lao People's Democratic Republic's economic performance during 2007­2008. Our macroeconomic situation remains fairly stable, with continued strong growth of above 7%, which is expected to continue into 2008. Output has expanded in mining, newly emerging processing industries, agricul- ture, new construction of hydropower projects, tourism and other serv- ices, as well as large FDI inflows from neighboring countries. Nonetheless, there are some risks of rising inflation. After falling to a record low level of 4.5% in 2007, overall inflation climbed to 6.4% in the second half of 2008. High fuel prices pushed up the cost of individ- ual living, agriculture, and industry. Moreover, we recently faced floods from the north to the south, which affected plantations, livestock, trans- portation, and infrastructure; this has had a cost not only in monetary terms, but also with regard to the well being of the villagers. Vientiane itself experienced its highest water level in 40 years; thanks to the proactive efforts of the Lao community-government, the private sector, individuals, and the international community from different parts of Vientiane, we were able to save the capital from flooding. We are confi- dent that the Bank and other donors will support us in restoring nor- mal living and working conditions in the regions of the Lao People's Democratic Republic affected by the floods During 2007­2008, the Government has adopted and implemented many reforms. On fiscal front, the Government has continued the implementation of a comprehensive medium-term Public Expenditure Management Strengthening Program (PEMSP) since 2005, focusing on strengthening Public Financial Management systems and building the capacity of the Ministry of Finance and Provincial Finance Depart- ments. In addition, the new Budget Law was adopted in 2007 to 90 6135-CH02_p021-091.pdf 4/1/09 12:13 PM Page 91 address weaknesses in the intergovernmental fiscal framework. Other key reforms include centralizing the treasury, customs and tax depart- ments, developing a new fiscal transfer system, establishing greater control of public finance resources, and aligning policies to the budget, as well as promulgating the new Audit Law. The implementation of the value-added tax has started early this month. The financial sector remains small and dominated by banks. The government has taken measures to strengthen the banking sector and level the playing field. There are more new investments in the private banking sector, the ANZ commercial bank, which is shared by IFC and Australian ANZ Bank, as well as Phongsavanh Bank, which is Lao's first commercial bank. As a result, the commercial banking law prom- ulgated in 2007 provides for transparent, clear, and easy licensing for establishing private banks. Furthermore, in order to fulfill the socioeconomic development plans set for the period ahead, the Government has initiated other major reforms such as improvement of the business environment, enhanced efficiency of investment, reduction of tariffs under AFTA commitments, and intensified preparation for WTO accession. We highly value the support of the international community, including bilateral and multilateral organizations, and international financial institutions. The Fund and the Bank have continued to pro- vide vigorous support and assistance to the Lao People's Democratic Republic in term of policy advice, infrastructure, economic programs and projects, capacity building, and technical assistance. That support has played a vital role in helping the Lao People's Democratic Repub- lic achieve economic growth and sustainable development. The Poverty Reduction Support Operations (PRSO) which, from the donor side, led by the Bank, has remarkably supported the structural reform to a more market-oriented economy, especially the improve- ment in the legal framework, which will form a foundation for sound and efficient development in the key sectors. We would also like to take this opportunity to urge the World Bank Group to continue the efforts in supporting the social and economic development and poverty reduction in the poor countries of our region as the Bank does with other regions of the world. ODA is an important factor in sup- porting the poor countries of this region to achieve their poverty reduction agenda and MDGs. On behalf of the Government of the Lao People's Democratic Republic, I would like to express my sincere appreciation to the man- agement and the staffs of the Fund and the Bank, and the fellow mem- ber countries for supporting the Lao People's Democratic Republic. I wish the Annual Meetings great success. 91 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 92 MALAYSIA: WAN ABDUL AZIZ WAN ABDULLAH Governor of the Fund and the Bank We welcome the 2008 Annual Meeting of the Boards of Governors of the World Bank and the International Monetary Fund. We would like to take this opportunity to thank the Bank and the Fund for the ongoing efforts in carrying out their respective mandates to eradicate poverty and improve financial management in member countries. We also would like to thank Mr. Robert Zoellick, the president of the Bank for the immediate response to support member countries affected by the food and energy crisis. We hope the Bank will continue to be receptive to distress calls by member countries and strive to be proactive with workable and pragmatic solutions. Global Economic Outlook Prospects of global growth are weighed down by the prolonged financial turmoil originating from the United States sub-prime crisis, and the surge in inflation triggered by higher commodity prices. The 2008 WEO indicates that developed economies impacted by the finan- cial crisis are bordering on recession during the second half of 2008, while emerging and developing countries which experience high infla- tion are heading for slower growth. The world economy is expected to moderate further in 2009, unless financial institutions resolve their cap- ital and solvency problems; commodity and housing markets stabilize; and domestic demand in emerging and developing countries continue to strengthen. The current global slowdown clearly underscores the need for concerted commitments by national and international author- ities to institute policies as well as regulatory and governance mecha- nisms to address the challenges and sustain global growth. Malaysian Economy Structural reforms and pragmatic policies undertaken over the past five decades have systematically transformed the economy into one that is broad-based and diversified. More so, since the 1998 Asian crisis, when Malaysia defied the prevailing orthodoxy of the day and under- took radical measures to ensure the economy is more resilient and bet- ter positioned to withstand challenges from the external environment. The Malaysian economy registered strong growth of 6.3 percent in 2007, and posted higher-than-expected growth of 6.7 percent during the first half of 2008, despite rising inflationary pressures and external uncertainties. Steady growth in exports, particularly for commodities and resource-based manufactured goods, as well as sustained private 92 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 93 consumption and investment supported the robust expansion of the economy. On a sectoral basis, growth was led by the services sector at 7.8 percent. Sturdy growth in wholesale and retail trade as well as healthy performance in the communication, transport and storage, and finance and insurance sub-sectors underpinned the expansion in the services sector. The manufacturing sector recorded 6.3 percent growth, contributed mainly by domestic-oriented industries, such as transport equipment, food and construction-related activities. Growth in the agri- culture sector was 6.1 percent, supported by strong expansion in palm oil production, making Malaysia well-positioned to benefit from the commodities boom. The Malaysian economy is projected to expand 5.7 percent for 2008 and 5.4 percent in 2009. Fiscal policy is focused on ensuring effective public spending. The higher fiscal deficit expected this year is due to increased commitments in providing social assistance, sustaining growth momentum and man- aging inflation. Nevertheless, the government remains firmly commit- ted to consolidate its financial position and reducing the budget deficit in 2009. The international reserves, remains high at US$109.7 billion, sufficient to finance 9 months of retained imports and is 4.1 times the short-term external debt as at 30 September 2008. In relation to monetary policy, the Central Bank has maintained a stable policy interest rate since April 2006. The banking sector remains resilient, well capitalized with relatively low loan to asset ratios in mortgage financing and little exposure to the US financial crisis. The risk-weighted capital ratio (RWCR) is at 13 percent; and has better asset quality with nonperforming loans ratio of 2.7 percent as at end- June 2008. Net funds raised in the capital market were higher at US$12.3 billion. These strengths ensure the Malaysian financial system continues to perform its intermediation function efficiently. Neverthe- less, the government will remain alert and vigilant in view of the increasing uncertainties in the global financial market. World Economic Development Issues We note the Bank and Fund's concerns on recent economic devel- opments and their effects on long-term growth as well as on the vulner- able groups. High oil and food prices have had serious consequences on the world economy, especially developing countries. Rising prices have not only contributed to inflationary pressures but have also led to social unrest, undermining the political stability in some countries. In striving for solutions to solve these problems, we urge the Bank and the Fund to be more proactive and aggressive in garnering greater international cooperation to bring about stability in the commodities market. 93 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 94 Of grave concern is also the prolonged duration of the financial cri- sis in the United States. Given that financial markets are highly inte- grated worldwide, the risks to international financial stability are very real. As the turmoil on Wall Street affects Main Street, we are monitor- ing closely the events unfolding, and are very concerned about the sec- ond round effects on the real sector. If the current financial crisis is not addressed comprehensively, the global slowdown is bound to worsen and further impact negatively on the low income economies. We, there- fore, hope that the affected individual countries will take strong and immediate measures to resolve the crisis quickly before the contagion effects engulf the whole world. We also hope that the Bank will step up efforts to assist the more vulnerable among us. Going forward, we strongly suggest the Fund to enhance its surveil- lance efforts to address the inadequacies in regulatory and governance mechanisms among member nations to ensure better market oversight, without fear or favor. Countries that have exercised greater discipline in banking supervision, securities market regulation and corporate gov- ernance, especially in the aftermath of the Asian financial crisis, should not have their economic gains eroded by the risky behavior exhibited in the more developed markets. We, therefore, agree with the IMF Managing Director that,"a systemic crisis demands systemic solutions," and that, "vigilance, objectivity and collaboration--on a global scale-- will be needed to deal with the challenges ahead," not the least being the spillover of the financial fallout into the real economy. In this con- text, we strongly urge the International Financial Institutions to focus on strengthening the international financial architecture to better iden- tify weaknesses that contribute to economic and financial vulnerabili- ties, providing early warning signals, and instituting preemptive meas- ures and policy reforms to avoid crisis situations. Climate Change Climate change is increasingly recognized as a challenge to sustain- able development. We concur that the impact of climate change poses a higher risk to emerging and developing economies in achieving their development goals compared with developed countries. Instituting miti- gation and adaptation measures in response to climate change imposes extra costs to developing countries, many of which are already grappling with critical poverty and growth issues. Abandoning developing coun- tries to their own devices to mitigate the effects of climate change is unjust and will not bring equity. Wealthy countries are responsible for the bulk of past green house gas emissions but enjoy higher gains from global wealth, while the low-emitting poor countries are hard hit by the consequences of climate change. Developed countries should, therefore, 94 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 95 assist developing countries with extra resources, in terms of funding, as well as facilitating technology transfer and capacity building to help integrate the process of mitigation and adaptation efforts to climate change into development projects. However, diverting existing funds from poverty reduction programs into climate change initiatives will not bring equity to developing countries. Specific funds, which have been established in response to the threat of climate change, should continue and developed Countries should honor their agreement under the United Nations Framework Convention on Climate Change (UNFCCC) to assist developing country parties that are particularly vulnerable to the adverse effects of climate change. In this regard, we welcome the Bank's efforts in setting up the Strategic Framework for Climate Change as part of measures to mitigate the impact of climate change. However, we wish to remind the Bank that the financing of cli- mate change actions must be well defined and not be taken from poverty eradication programs or the IDA allocation. Voice and Participation Reform We take note of the progress in the Bank's voice and participation reform. We would like to reiterate that the reform being undertaken should bring about equitable and transparent representation in the Bank's governance. While we can subscribe to the parallelism between the Bank and the Fund, the differences in the roles and mandates of these respective institutions must be taken into consideration in formu- lating the voice reform. What is appropriate for the Fund is not neces- sarily appropriate for the Bank. This is because both have distinct mis- sions. As such, using the Fund formulae for the Bank's reform will not reflect its true governance. It is fundamental for the Bank to consider voice reform with a deep understanding of its mandate in order to ensure that its specific development mandate and role are reinforced. Of paramount importance, regardless what methodology is adopted, the reform should enhance legitimacy, credibility, and accountability with- out diluting the voice of developing countries, either as a group or as individual countries, and without imposing an extra financial burden. However, we are concerned that the option of doubling basic votes would lead to only a marginal increase of 1.2 percentage points to developing and transition countries voting power. We also welcome the suggestion that the selection of the president of the Bank be a more transparent, merit-based process, and open to all qualified nationals of all Member-States. We believe that the selection process must reflect the good governance and democratic principles espoused by the Bank. In conclusion, we would like to express our appreciation to the Boards of Governors, management and staff of the Bank and the Fund 95 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 96 for their good work in promoting economic growth, poverty eradica- tion programs and financial stability in resolving the difficult chal- lenges that lie ahead. MALTA: MICHAEL C. BONELLO Governor of the Fund It is an honour for me to address the Annual Meetings of the Interna- tional Monetary Fund and the World Bank. I would like to convey my appreciation to the management of the IMF and the World Bank, the government of the United States of America and the authorities of Wash- ington, D.C. for the excellent arrangements made for these meetings. I also take this opportunity to welcome New Zealand as a member of the Multilateral Investment Guarantee Agency. A warm welcome is extended to Dr. Boutros-Ghali on his appoint- ment as chair of the International Monetary and Finance Committee and Ms. Izumi Kobayashi as Executive Vice President of the Multilat- eral Investment Guarantee Agency. We are certain that the Bretton Woods institutions will benefit from their experience in international affairs and global finance. The past months have seen a number of organizational changes in the IMF and the World Bank Group. In this regard, I would like to express my appreciation for the service and ded- ication of all those who left one institution or the other, and congratu- late their successors on their new appointments. This year's meetings take place against a background of severe cri- sis in global financial markets and a hostile and uncertain macroeco- nomic environment which continues to be substantially undermined by depressed conditions in housing markets and the negative impact until recently of a sharp upward trend in oil and commodity prices. In many economies, and especially in the advanced economies, eco- nomic growth prospects have deteriorated further since the summer. Although the deterioration in terms of inflation might be over, price pressures are set to remain elevated for a while as supply in commodity markets responds only gradually to demand. This situation is exacerbated by the ongoing turbulence in the finan- cial markets and the persistence of global imbalances, which compli- cates the task for macroeconomic policy. Indeed, the measures that would seem to offer the best possibilities for the restoration of smoothly functioning financial markets may not be consistent with the longer- term macroeconomic objectives of fiscal soundness and price stability. There is no doubt that the commodity price shocks and the eco- nomic slowdown are having a more pronounced impact on highly open economies and developing countries. A continuation of present trends 96 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 97 risks undoing the progress made in recent years towards the Millen- nium Development Goals. As higher commodity prices, lower external demand and the automatic stabilizers continue to weigh on the public finances of developing countries there is a risk that they will not be able to undertake public sector projects that are necessary to deliver sustainable economic growth. Developing countries' external reserves are also bound to experience erosion as most of them are net commod- ity importers. In this regard, we welcome the efforts undertaken by the Bretton Woods institutions to make their financial assistance more promptly available to those countries most affected by the energy and food shocks, and to encourage the resumption of trade liberalisation talks. This should contribute to a faster recovery in economic growth world- wide. It should be emphasised, however, that the upward trend in com- modity prices also reflects structural factors. Consequently the finan- cial assistance available from the Fund and the Bank can only offer temporary respite to an adjustment process that in the medium- to longer-term will imply an inevitable change in consumption patterns. We believe that the IMF and the World Bank can facilitate adjust- ment in these countries, first by allowing temporary deviations from preestablished targets in country programs, provided that end objectives are not redefined and time frames are set for reverting to optimal policy paths as soon as this is feasible for the borrowing countries concerned. Second, as the institution responsible for international monetary stability, the IMF must also ensure that the short-term response to the financial crisis is conducted without amplifying global imbalances. The combination of housing market shocks, elevated commodity prices and ongoing financial turmoil highlights the need for a more resolute implementation of the policy commitments aimed at ensuring an orderly correction of these imbalances. Third, the advice and capacity-building initiatives of the Fund and the Bank can be formulated so as to encourage the adoption of new consumption patterns, a more efficient use of energy resources and a faster switch to renewable sources of energy. This, however, has to be achieved with due consideration being given not only to the two institutions' respective mandates and comparative advantage, but also bearing in mind the availability of knowledge bases of other institutions that have expertise in energy and related environ- mental issues, such as climate change. Through the combined expertise synergies will be achieved, ensuring an efficient utilisation of resources. This principle should also guide the activities of the IMF in low income countries in general, possibly the area of the Fund's responsibilities where there is the greatest risk of overlap with World Bank operations. The 97 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 98 recently concluded review of this aspect of the Fund's work offers a good opportunity to identify those areas where there might be room to rational- ize its noncore activities and focus instead on those areas where its efforts can add value. It will also be important to ensure, however, that the Fund's lending policy as it applies to LICs takes due account of its implications in terms of debt sustainability as well as the overall objectives of the broader review that is underway with regard to the other lending instruments available at the Fund. In a sense, the current international situation has rendered such a broad review timely. It has brought to the fore weaknesses in the accounting and regulatory framework, as well as channels of financial contagion that were previously unforeseen. Moreover, unlike the more recent financial and currency crises, the current one does not have its origins in emerging market economies, but in the sophisticated finan- cial markets of the advanced economies. At this juncture, therefore, it may be relevant to consider whether the Fund's current lending framework only remains relevant to a small subset of members under a limited set of circumstances or whether it could be rendered more relevant to the membership of the Fund as a whole by being endowed with the capacity to respond to a broader range of potential events. We believe that the papers presented by the Fund staff provide a useful first step towards a simpler and more transparent lending frame- work. However, further reflection is required, not least on what instru- ments should be terminated and what new instruments and financing terms would be compatible with the Fund's mandate. In this regard we note that some of the proposals put forward, such as the idea of mak- ing financial assistance subject to collateral, do not seem to be consis- tent with the Fund's mandate and do not really offer a workable alter- native. Furthermore the proposed `quiet' facility would bring into question the Fund's efforts to enhance its institutional transparency. In addition we believe that further analysis should be undertaken by the Fund to see how conditionality could be streamlined and tailored to the circumstances of different countries without departing from the principle of uniformity of treatment and without impinging on the revolving nature of the Fund's resources. Recent financial market events confirm the continued importance of the Fund's surveillance activities and the need for an even handed and transparent approach towards its implementation. To a large extent, the Triennial Review of bilateral surveillance correctly identi- fies those areas where there seems to be the greatest scope for modifi- cation. Here it would be pertinent to mention the need for more atten- tion to low probability events with potentially significant regional or 98 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 99 global effects, the links between the financial and nonfinancial sectors, and regional and multilateral spillover effects. We also see a role for the systematic reporting on the follow-up to past surveillance activities in Article IV Reports. For many members, particularly nonprogram countries that are not considered to be of sys- temic importance and that are not subject to some form of peer pres- sure from other institutions, IMF surveillance remains the best avail- able framework for conveying relevant policy advice and ensuring it is implemented in a timely and meaningful manner. For this reason too we share the view of the Managing Director that the newly launched `ad hoc' consultation procedure should not replace, but complement regular Article IV Missions. We also welcome the draft Statement of Surveillance Priorities but reiterate our view that its implementation should not result in an increase in administrative burden. I conclude by assuring the management and staff of the Fund and the Bank of our continued support as they continue to press ahead with their efforts to refocus and restructure, and in their broader efforts in promoting international financial stability and poverty reduc- tion in an increasingly global challenging environment. MOLDOVA: MARIANA DURLEAS¸TEANU Governor of the Bank It is an honor for me to participate at this important event and a privilege to be here during the most challenging and worrisome times for the global economy. Allow me to start with a few words about the recent economic developments in my country. The Moldovan Economy Despite a series of exogenous shocks and the severe natural calami- ties experienced during the last three years, the Moldovan economy has been growing at an average annual rate of 5 percent since 2005. Despite current challenges, the overall performance is expected to improve in 2008: ˇ The GDP will increase by 7.5 percent. ˇ The budget deficit is targeted at 0.5 percent of GDP. ˇ Poverty will continue declining to 26 percent from 30 percent in 2006. Also, FDI increased further in recent years: in 2008 alone, the FDI inflows increased by 2.4 times compared to 2007 and reached 15 per- cent of GDP, due to improved investment environment. Remittances inflows continue to be strong, they exceeded 30 percent of GDP in the 99 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 100 last 3 years. This proves the fact that the Moldovan economy is getting more and more integrated into the global economy, with the resulting positive and also negative consequences. The huge inflow of foreign exchange exerts significant pressure on the Moldovan currency leading to its appreciation. During the last two years, the Moldovan Leu appreciated by over 25 percent against the US dollar. In turn, this affected the competitiveness of our exports and, as a consequence, we have a continuously growing trade deficit. Together with the National Bank, the government of Moldova has been conducting a tough fight against inflation.The increase in interna- tional energy and food prices, combined with the significant inflow of foreign exchange makes this fight extremely difficult. Nevertheless, we have managed to reduce the annual inflation rate from 16.9 percent in May to 10.7 percent in September and hope to bring this indicator to below 10 percent by the end of the year. The fiscal performance has been strong. The National Public Bud- get revenues increased from 38.6 percent of GDP in 2005 to 41.8 per- cent in 2007. Strong revenue performance allowed the government to implement a three-fold "liberalization" initiative, which includes capital legalization, tax amnesty, and introduction of a zero corporate tax rate on the reinvested income. The reform aims at reducing the tax burden and creating a better business environment. In the meantime, we are continuing public expenditure reforms with the objective to improve resource allocation for investments and increase the efficiency and accountability of public spending. Prudent debt management policy has allowed us to reduce the public external debt to GDP ratio from 22 percent in 2005 to 12 percent in 2008. In the last eight years, the Moldovan economy registered important achievements in all areas, but serious challenges continue to threaten the sustainability of these achievements. To deal with these challenges, in 2008, the Moldovan Government began the implementation of the National Development Strategy for 2008­2011, which aims at: (i) Enhancing the competitiveness of the national economy, (ii) Development of human resource, enhancing employment and promoting social inclusion and (iii) Regional development. Both IMF and World Bank support the new Strategy. Relations with the Fund Moldova's cooperation with the IMF has been on an ascending trend in the last few years. Since 2006, we have benefited from about 77 million SDR, which were used to build up Moldova's international 100 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 101 reserves, which are now covering more than 4 months of import. In addition, we have benefited from important technical assistance, including on strengthening tax administration, strengthening banking supervision, and improving national statistics. Talking about our future cooperation, I would like to raise a few issues. And, as a Minister of Finance, I will start with fiscal issues. All these years, the government of Moldova has been maintaining the budget deficit below 0.5 percent of GDP, and we are committed to stick to a sound fiscal policy in the future. However, given the current global challenges that will affect us as well, we consider that a more balanced approach toward the fiscal pol- icy is needed. The current challenges call for the fiscal policy to draw a fine line between balancing the need to help contain inflation, while at the same time, ensure economic growth and continued decline in poverty. The risks to the latter two tasks are currently on the downside. Moreover, we do have the resources (from privatization revenues) and we do not intend to spend on consumption needs. A slight increase in deficit would allow us to finance investment projects that are geopoliti- cally important and socially targeted. I would also like to call for more flexibility with Fund conditionality which envisages privatizations of high values assets. We all know that these kinds of transactions have to take place at the right time, and the right time for the market might not always be the one envisaged in the program. I would also like to request the support of the IMF in helping us to manage the growing inflows of foreign exchange. I think we all agree that there are only a very few small open economies in the world that, like Moldova, have strong inflows of remittances and of FDI and there is not much we can learn from the international experience on this. We would appreciate the support of the IMF staff in identifying additional financial instruments to withdraw the excessive foreign exchange from the market. Another issue that we would need assistance with is the creation of a Risk Mitigation Fund to provide support to poor people in the situa- tion of food crisis, increase in energy prices, climate change, financial crisis, etc. We would like to ask for advice on the best practices regard- ing establishing and managing such a fund. Relations with the Bank Regarding our cooperation with the World Bank, we have recently completed the implementation of the previous country assistance strat- egy and are currently defining the new partnership program.We appre- ciate the Bank's decision to keep the next program flexible and to increase the share of the budget support. 101 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 102 I would like to say a few more words about policy conditioned budget support. Starting with 1999, we are implementing nationally owned reform programs (PRSPs) which should also serve as a basis for IFIs sup- port. Indeed, the policy conditionalities negotiated with the World Bank do fit the general objectives formulated in our national documents. How- ever, these days, more and more donors are coming up with policy condi- tions. Although we understand that conditionalities are needed to push for the implementation of unpopular reforms, having too many of them might be counterproductive. Maybe you could unify your efforts with other donors (like EU) and have one single document that will define the policy conditions? This will make our life much easier in terms of manag- ing the process and implementing the commitments. Also, very often, lit- tle money is accompanied by lots of conditions. The second issue that I would like to raise is the need to improve the planning of resources. First, we believe that, in many cases, the Bank disbursement procedures continue to take too much time. In addition, the disbursement of budget support is conditioned by the ful- fillment of policy commitments which are not entirely in the govern- ment's hands (like approval by Parliament), which can cause significant delays in disbursing the money. Both these factors are making our expenditure planning exercise very difficult. Finally, I would like to stress that the IMF and WB relations with small countries like Moldova should be more flexible, and allow for ongoing adaptation of the range of instruments, tailored to the coun- try's needs and capable of providing effective assistance with finding the right response to global challenges. MYANMAR: U THAN NYEIN Governor of the Fund I would like to express our appreciation to the host government and the people of the United States for the hospitality extended to our del- egation. I would also like to thank the managements of the Bank and the Fund for their excellent arrangements made for this meeting. At this point, I wish to congratulate Mr. Zoellick and Mr. Strauss- Kahn for their able leadership. Under their leadership and guidance, the institutions have made considerable contribution to the promotion of international cooperation and development. I would like to take this opportunity to extend my deepest sympa- thies to all the governments and peoples of the countries that had faced natural as well as man-created disasters during this year. As a country that has suffered an unprecedented natural disaster, we sin- cerely can identify well the hardships and sorrows that those countries had to face. 102 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 103 In contrast to last year, we meet here at a time when the global economy remains bleak as down side risks remain. Due to high com- modity prices, natural disasters and the recent financial turmoil, the global economy remains weak. There is no denying that there is still much to be done in order to have the global economy on the path to sustainable growth. In this context, collaboration and cooperation, not only between advanced countries, but also between advanced countries and emerging economies, are essential for global macroeconomic stability and pros- perity. Effective, focused, and flexible macroeconomic measures may be needed. The present issues of importance are to maintain the pace of growth, lower inflationary pressures and lessen the impact of the financial turbulence. I would now like to brief the Meeting on recent developments of the Myanmar economy. As have been stated in previous year, we have been formulating and implementing short-term plans since 1992­93. 2007­2008 was the second year of the Fourth Five-Year plan and we have been able to maintain the momentum of the growth rates that have been previously achieved. The agriculture sector is still the main- stay of the economy as its share in GDP is around 44 percent, while the industry sector's share is 20 percent and the services sector's share is 36 percent. It can be said that our economy is on the right path to sus- tainable growth momentum. On the external front, the current account is in surplus, due mainly to surplus in the trade account. The surplus can be attributable to increases in exports and remittances from abroad. As such, our foreign exchange reserves have also risen considerably. In the fiscal front, although the budget is still in deficit, the deficit is on a declining trend. We intended and were trying to have a balanced budget this year. However, as we have to spend for relief, rehabilita- tion, and prevention of contagious diseases for the victims of the cyclone, we expect this year's expenditure would be quite large. We are making efforts and taking necessary measures to increase revenue that we hope will help us offset some of the increase in expenditure. On the monetary front, supervisory and regulatory powers of the Central Bank have been strengthened and due diligence and care had been taken to ensure that the banking sector is not used for improper transactions, including money laundering and financing of terrorism. The only thing that remains to be tackled is the inflation rate, which is still relatively high but is gradually declining. In May, the second month of this fiscal year 2008­2009, Myanmar was struck severely by Cyclone Nargis with unprecedented force, con- centrating mainly on the region most important for agriculture, fishery, and salterns. The cyclone also destroyed and damaged an enormous 103 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 104 amount of households and displaced hundreds of thousands of people. Thousands of lives were lost while thousands are still missing. Accord- ing to the Post-Nargis Joint Assessment (PONJA) report, the impact of the cyclone on the economy and people has been severe due in part to the fact that it happened right after the harvest of the summer paddy. As such, the recovery needs are significant and span all sectors and the estimation of the total economic losses amounted to about 2.7 per- cent of the projected 2008 GDP. Internal and external assistances have been prompt, and timely assistance was rendered to us. I would like to take this opportunity to thank all the organizations that have provided us with humanitarian assistances. Even with this unfortunate occurrence, I am very much pleased to report to the meeting that during the first quarter of this year we have been able to achieve a relatively good growth rate. We are ready to put all out efforts to maintain our targets and are hopeful that we will be able to overcome whatever difficult tasks that lay ahead in order to achieve macroeconomic stability and growth. In doing so we will be giving due consideration for the development of the social sectors in order to meet all the MDGs in time. We have been lucky in one way, as we do not have developed capi- tal or financial markets yet and therefore we will not have direct impact of the recent financial crisis on our economy. However, in this globalized world where a country cannot stand alone, we understand that there would be some indirect impact on Myanmar. We stand ready to cooperate with all the countries in the region in order to overcome whatever challenges and risks that we might face in the future. Myanmar has been a member of both organizations for over 56 years. We have always worked closely with these organizations and we will continue to do so in the future. NEPAL: BABURAM BHATTARAI Governor of the Bank It is a pleasure and honor for me to address this noble gathering of the eminent officials of the World Bank Group and IMF as well as my fellow governors and colleagues as a Finance Minister and Governor of the newly born Federal Democratic Republic of Nepal. This annual global assembly of development professionals and practitioners pro- vides an appropriate platform that can best be utilized for discussing and deciding on how we can wipe out the curse of absolute poverty from the face of the earth and create a decent, egalitarian, peaceful, and prosperous society in all parts of the world. Let me briefly explain the recent political development in Nepal. We have fought and won the political war--a war to emancipate the 104 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 105 people of Nepal from all forms of feudal exploitations. Feudal monar- chy that represented stagnation and underdevelopment has come to an end. People of Nepal have become fully sovereign. We have achieved this through collective efforts and consensus of all political parties. For the first time in Nepal's history, people's representatives are going to write the new constitution. After a decade of peoples' war, the peace process now is moving in the right direction and we will collectively steer this to success. Internal conflict is now over and the country is heading towards lasting peace. The steps that we have traversed so far starting from the signing of Comprehensive Peace Accord between the Communist Party of Nepal (Maoist) and the then government in November 2006 to the formation of the present coalition government headed by the Maoist party following the Constituent Assembly Election mean that political instability will no longer remain as a problem. The writing of new constitution of the nation within two years will complete the polit- ical transition of establishing People's Republic of Nepal. While we have made progress on the political front, we now have to fight the economic war--a war against economic stagnation and depriva- tion of masses from even the basic necessities of life.This is the challenge that we have to face head on. And we must aim to take big leaps. It is time that we take high ambitions and put all-out efforts to achieve them. During the past 50 years of planning, the growth rate of the Nepalese economy has been very low, or barely sufficient to keep pace with the population growth rate. The rate of savings is just about 11.5 percent of GDP, which means high dependence on foreign assistance to meet the investment requirement for the targeted rate of growth. We realize that poor governance has been one of the fundamental constraints for Nepal's rapid development. We have focused our efforts on improving governance, minimizing leakages in expenditures and properly targeting public expenditures so that we get the most out of government's investments. Nepal is now in a phase of economic transition from feudalism to industrial capitalism, with appropriate blend of social welfare. And we want to complete this transition as fast as possible. In this process, we will have to demolish old growth inhibiting rules, structures and institu- tions and initiate new growth promoting strategies wherein each indi- vidual will be able to realize his/her production potentials. Our vision is to build a `New Nepal' through rapid socio-economic transformation. We have set out the economic agenda with a goal of achieving double- digit economic growth rate in the next two years with, of course, proper distribution. For this, we have opted for a three-pronged strategy: pro- motion of private sector investment in growth-propelling sectors, pub- lic-private partnership in large infrastructure projects and cooperatives 105 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 106 in rural areas in agriculture, agro-processing, marketing activities and in operating public distribution system. Our development priority is on water resources and hydropower, and agriculture and tourism as these are the areas in which Nepal has com- parative and competitive advantage. We would be creating investment- friendly environment for foreign direct investment in these areas. For this, we would need rapid expansion of physical infrastructures and accelerated investments in education and health. As we are embarking upon a challenging journey of rapid economic growth focusing on improving the lives of millions of poor people, the rising commodity prices have made our development efforts costlier. Commodity prices have also made poor people's lives even more miser- able. Just when the world community was tackling the rising commodity prices, there is now the other crisis propelled primarily by falling asset prices. The exact magnitude of current financial crisis is not yet known as each day banks, one after the other in advanced countries, are report- ing financial distress. We are not quite sure where this all will lead to, but the world economic outlook looks bleak for the foreseeable future. I think we have all gathered here at the right time to debate on these issues and I hope that, collectively, we will find proper solutions. I urge that when advanced countries focus on correcting their domestic economic woes, they should not lose sight of the need of under-developed and developing countries. I take this opportunity to express our sincere thanks to all those who have extended support to our peace process and in rebuilding Nepal. I would also like to thank the Bank and the Fund for their renewed commitment to help achieve our vision of New Nepal. Before I close, I would like to thank the government and the people of the United States for the hospitality. I also thank the Bank and the Fund for the excellent arrangements made for the Annual Meetings. I wish the Annual Meetings a grand success and thank you all for your gracious presence. NETHERLANDS: RUUD TREFFERS Temporary Alternate Governor of the Fund and the Bank We meet in exceptionally turbulent times, affecting all our countries one way or the other. In recent weeks we have seen that the current multilateral system has proven unable to offer a sufficient response to the complex combination of the financial, climate, food and energy crises. The world is globalized in terms of risks and opportunities, but hardly in terms of effectively responding to global crises. If every coun- try works on a solution only for its own problems, the most vulnerable countries and groups draw the shortest draw. 106 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 107 We must change that, and ensure that the current response to the crises contributes to a structural change in the way we do business at the multilateral level. First, I would like to focus on the role of the Interna- tional Monetary Fund as guardian of international financial stability. Subsequently I will speak about the challenges for the World Bank. Strengthening the Role of the IMF as Guardian of International Financial Stability The Fund can play an important role to improve the international financial architecture--a role that should be complementary to that of other international financial fora, such as the Financial Stability Forum and the Bank of International Settlements. A strengthened financial stability role of the IMF needs to be reflected in all its tasks, including surveillance, its lending framework and in its Technical Assistance. Enhancing Surveillance The Fund has a unique position within the international financial architecture. Not only does it have an almost universal membership, it also is in active dialogue with member states through its bilateral sur- veillance. This dialogue goes further than just offering local authorities feedback on their policies. Indeed, the Fund's advisory role is firmly anchored in its mandate to survey macrofinancial conditions and poli- cies in member states with the purpose to foster open economic rela- tions and prevent negative spillover effects. This close relationship with so many countries makes the IMF a potentially great source of knowl- edge on issues of local, regional and global financial stability. In order to live up to this potential, surveillance should further be tailored to assessing risks and vulnerabilities in financial sectors and markets from a macro perspective. Although the Fund has made important strides in this respect, I think there is still room for improvement. First, the Fund can sharpen its focus on financial sector issues in bilateral surveillance and address them more systematically. Such enhanced focus requires that the IMF has sufficient financial expertise. Moreover, the statement on surveillance priorities is a step toward a more systematic approach in surveillance. A further step could include developing a framework or "checklist" of macro risks and sector spe- cific vulnerabilities that should be assessed. I see this as a means to quickly incorporate lessons learned through the surveillance of coun- tries and through multilateral surveillance. Moreover, a more system- atic approach in surveillance can also support the implementation of policy advice of other relevant bodies, such as the FSF, and provide feedback on the adequacy of these policy responses. 107 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 108 But stepping up financial sector surveillance also requires the commit- ment from member states. The current credit crisis shows how disequilib- ria within and between large economies can threaten world-wide finan- cial stability. Therefore, all systemically important economies should reach out to the Fund and sign up for an FSAP or an FSAP update. Second, the Fund's multilateral surveillance should be aimed at identifying cross-border financial linkages and risks. The current crisis has shown how closely international financial markets and institutions are connected. Even though many of us have pointed to the risks of highly leveraged and complex financial products, none of us had fore- seen the severity of the chain reactions that followed, when defaults on US subprime mortgages started to rise. We should not have the illusion that the next crisis can be predicted by the IMF or any other organisa- tion, but we can strive to develop "early warning systems" that can at least mitigate the impact of shocks. The Fund can enhance our under- standing how financial shocks ripple though the financial system and how this system interacts with the real economy. Third, I think that financial stability considerations should also be at the forefront when the IMF is analyzing the sustainability of a coun- try's exchange rate. Clearly, the related global imbalances have been-- and continue to be--a factor in the current financial turmoil. The 2007 surveillance Decision has been an important step in redefining the Funds exchange rate surveillance and I support a firm implementation of this Decision. However, I think that from a financial stability per- spective there is a difference between a potentially overvalued and undervalued exchange rate. History has shown how a sudden down- ward correction of the exchange rate, sometimes triggered by specula- tive attacks, can be the cause of a deep rooted economic crisis. Even when discounting for large methodological problems in assessing exchange rates, I think that the IMF should be very careful in its approach toward restoring equilibrium in a country with an overvalued exchange rate, both in policy advice and in communication. Adapting the Fund Lending Framework The Fund is currently reviewing its lending framework. Also in this area there might be room for better compatibility with financial stabil- ity challenges. The world-wide credit crisis reflects the vast size of cross-border capital flows and also reminds us of the importance of investor confidence, not only towards individual financial institutions, but also towards specific countries that for example have relatively large financial sectors. Adapting the Fund's lending framework to these challenges is not easy. In a world with large capital flows, confidence could be under- 108 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 109 pinned by the possibility for the Fund to extend large amounts of financial support. This might call for an increase in access limits or the development of an insurance type of instrument. However, Fund support only works if it addresses the root causes of a crisis. This requires adequate conditionality, in order to signal a credible adjust- ment of economic policies. But any instrument that quickly disburses large financial packages erodes the Fund's possibility to capture appropriate policy responses. It will be a challenge to find the right balance between conditionality and access to financing. In the regard, I think the IMF should also further exploit its role as finan- cial catalyst. Technical Assistance This brings me to the third task of the Fund, technical assistance. In the midst of a credit crisis, it is easy to forget the important upsides of international capital flows for economic growth and prosperity. I remain fully convinced of the merits of cross-border financing. There- fore, we should help developing countries in opening-up to outside investment. Together with the World Bank, the IMF can use its techni- cal assistance toolkit to help build institutions that are strong enough to absorb the roars of international capital markets, while benefiting from foreign investment. World Bank: Playing the Anti-Cyclical Role The World Bank and other MDBs must now act to mitigate the risks of the current crises, and support the developing countries to grab available opportunities, actually helping them to sustain their growth. I appreciate the initiatives taken by President Zoellick in this regard. Over the last years, the World Bank and other MDBs have created large reserves. These reserves now can and should be used for extra financing and further mobilisation of private money flows to counter- cycle negative consequences for poor and vulnerable countries. And, even more than money, these countries need knowledge and top-of- the-bill, on-time advice. To deliver that, a bank has to be close to its clients. It's the local response of the World Bank that will make the dif- ference and enable us to think out of the box. World Bank: Linking Strategy to Reform on the Ground We strongly support the six strategic themes chosen as the World Bank's priorities. Now, we have to act on a translation of these priori- ties into the day-to-day operations of the Bank. How will the Bank 109 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 110 change its procedures to be better able to address the challenges linked to each of the priorities? Two examples. We definitely subscribe to the view of president Zoellick, that the Bank has an essential role to play in fragile states. His recent speech in Geneva on this topic contains a number of very inter- esting thoughts on this issue. But how is the Bank going to change its procedures in such a way that it will be able to react faster to the urgent needs of fragile states in a post-conflict situation, such as for example Liberia? Some progress has been made, but especially in the case of fragile states, the Bank needs to be able to act firmly and swiftly in order to help materialize the peace dividend, and we, as donors, should support the Bank in adapting its procedures and make that possible. Another example lies within the priority area Global Public Goods. The Netherlands welcomes the approval of the new Climate Invest- ment Funds and the Strategic Framework on Climate Change and Development as positive first steps towards a more sustained multi- lateral response, within the framework of the UNFCCC. Now we need to move from theory to practice and to put both funds and the Strate- gic Framework into concrete action on the ground. Combating climate change and fostering development require an integrated approach in Country Assistance Strategies, and in their implementation. World Bank: Enhancing the Voice and Participation of DTCs in the World Bank Group As requested by the Development Committee during its recent Spring meeting, an initial reform package on Voice & Participation has been prepared by Management, and agreed upon yesterday by the Development Committee. The Netherlands welcomes the decision to add an additional African chair to the Board and to double the basic votes, as a first step. Moreover, I am pleased with our agreement that all shareholders will uphold the principles of a merit-based, open and transparent process for selecting future Presidents of the World Bank. We simply want the best woman, or perhaps even a man for that job, irrespective of her or his passport or political affiliation. Now, we must keep the momentum and move towards a significant realignment of shares, reflecting the global mandate of the WBG: we don't need static blocs. Shares and voting weights should therefore be determined by the relative weight of a country's economy, and also by a shareholder's use of the institution, be it through IDA donations and trust fund support or through the procurement of the WBG's financial and advisory services.That is only fair. Accountability and effectiveness are closely intertwined. I am therefore pleased to see that the document on voice and participation 110 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 111 pays sufficient attention to improving effectiveness through strength- ening internal governance and accelerating decentralisation. NEW ZEALAND: JOHN WHITEHEAD Governor of the Bank Developments in the Global Economy and Financial Markets and Implications for New Zealand The Annual Meetings this year are taking place at a very challeng- ing time for all member countries. The implications for economic activ- ity and global growth from the current financial market turmoil and high commodity prices are serious--addressing these implications will require the concerted focus of our governments, with support from the Fund and the Bank as appropriate. The New Zealand economy, like a number of others, is currently facing imbalances in the areas of inflation, household debt, house prices, and the current account.As a result of drought, higher consumer prices, and previous monetary tightening, output declined in the first two quarters of 2008 and is expected to have declined marginally in the September quarter. Like others, the New Zealand economy is not immune to interna- tional developments, which we are expecting to be transmitted to New Zealand through the cost and availability of credit, business, and con- sumer confidence, lower terms of trade, and exchange rates. There are signs the economy is beginning to turn and growth is forecast to be positive in the final quarter of 2008 thanks to the recov- ery from the drought and tax cuts, but will remain subdued throughout most of 2009 as negative influences continue to affect the economy. Maintaining Momentum of Reforms New Zealand is pleased to see concrete steps in the last few years taken by both the Fund and the Bank, which are aimed at enhancing their effectiveness, legitimacy, and credibility. In particular, New Zealand welcomes the Fund's quota and voice reform package, which includes a built-in regular review mechanism, the Fund's efforts to ensure that it will operate on a financially sustainable footing, and its ongoing efforts to reform its internal governance. In terms of the Bank, we have been supportive of its efforts to renew its strategic direction and we look forward to agreement on a comprehensive package on voice and participation reforms in the near future. Reform is an ongoing and long-term process at both institutions and it is important for all members to ensure that the momentum to 111 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 112 continue, firstly for proposed reform on different aspects to be pro- gressed, and secondly for agreed proposals to be implemented. World Bank Voice and Participation New Zealand fully supported the Bank's commitment to develop a comprehensive package on voice and participation reforms for consid- eration by Governors at this meeting. The eventual package needs to be comprehensive, achieve its aim of increasing voice and participation, be based on an inclusive and trans- parent process, and take into account the distinct nature of the Bank's development mandate. We would like to specifically note that we see comprehensiveness as meaning that the package covers more than just shareholding issues, but includes aspects such as the merit-based appointment of the Presi- dent, strengthening Board effectiveness and efficiency, and enhancing voice and participation in the Bank's operational work. New Zealand has supported and continues to support an open and transparent process for the appointment of senior positions at International Finan- cial Institutions, which should be open to candidates from all regions of the world based on merit. The different components of an eventual package are important in ensuring that all members continue to have a Bank that will be able to deliver effectively on its mandate. We look forward to further discus- sion on the package in the coming months, with the hope that agree- ment will be reached on its key elements along the agreed timeline. IMF Principles for Sovereign Wealth Funds New Zealand is pleased with the consultation, effort and thought that has gone into the development of the Santiago Principles. We believe that the practices and principles covered in the docu- ment will help ensure that Sovereign Wealth Funds (SWFs) have the appropriate legal framework, objectives, and coordination with macro- economic policies; institutional framework and governance structure; and investment and risk management framework. IFIs Work on Food and Fuel Prices New Zealand appreciates the extensive analytical work that has been undertaken by the Bank and the Fund on the food and fuel price increases. We are supportive the policy options put together to assist countries facing particular challenges as a result of price inflation. We believe it would be extremely valuable if various regional departments 112 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 113 could undertake work more specifically tailored to their particular region, taking the regional and country-based contexts into account. We also support the financial measures being offered by the Bank and Fund to those countries most affected by the price increases. Development Effectiveness New Zealand welcomes the Accra Agenda for Action and encour- ages the Bank to work closely with donor and country partners to implement it. Addressing these aid effectiveness challenges will also require an internal focus on culture, incentives, systems, and practices. New Zealand acknowledges the encouraging progress in the Bank's work on development effectiveness, as noted by the 2008 Annual Review of Development Effectiveness (ARDE). The use of impact evaluations and the results management system for IDA are promising developments in corporate-level monitoring and evaluation. We note that project performance for low-income countries (LICs) continues to show a rising disconnect between the Bank's optimistic self-ratings of project performance and IEG's final ratings of develop- ment outcomes. It is highly important to achieve the necessary improvements in the Bank performance management system including strengthened results frameworks with robust baseline data, for realistic assessments of development results. The challenge for the Bank to improve performance management is partly one of changing the incentives and culture of staff towards more accurate reporting. This is common to most development agencies. The persistence of incentives for staff to work on the preparation of proj- ects rather than implementing them is a well-recognized major issue. This supply-driven culture in project preparation tends to stimulate over-optimism in assessing the likely outcome at the start of a project in order to get it approved. As shown by the 2008 ARDE, often only after the project has been completed, are more realistic assessments taken. World Bank Engagement in the Pacific New Zealand welcomes the increasing World Bank engagement in the Pacific. We anticipate the growing regional presence will facilitate better coordination and cooperation efforts for Pacific governments. In expanding its outreach it is important that the Bank draws fully on the resources available through other donors' existing relationships with developing member countries, and adds value to these rather than attempting to replicate them. The challenge is to ensure that donors work collectively with each other and our Pacific partners to improve 113 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 114 efficiency, responsiveness, and accountability of economic advice and program delivery. In this respect, we urge the Bank to expedite further harmonization efforts in the Pacific by finalizing plans for shared country offices with the ADB in Samoa, the Solomon Islands, and Tonga. We welcome con- firmation of the decision to co-locate two experts in the IMF's regional technical assistance facility, PFTAC, in Suva, and look forward to see- ing their impact on strengthened efforts to improve SoE management and the follow-up of public financial management surveys across the region. New Zealand is pleased to be part of the Pacific Regional Infra- structure Facility (PRIF) and we look forward to the upcoming design and prioritization process in phase one. Our interest is particularly in the potential for improved technical assistance, donor coordination, and a greater emphasis on infrastructure maintenance. Global Public Goods New Zealand stresses the need to identify the Bank's comparative advantage in global public goods (GPGs), especially given the Bank's increasing array of global programs, notably in climate change. Going forward it will be necessary for the Bank to strengthen incentives to deliver GPGs at the country level. This could include the provision of clearer organizational arrangements to best select and link responses at country, regional, and global levels; enhance the delivery of knowl- edge to country teams working on GPGs; and ensure that the perspec- tives of developing countries are effectively connected with global responses. It will be important to draw on the existing knowledge of all development partners in such situations. Where GPGs are in conflict with a country's expressed interest, questions of cost burden and ownership need to be fully considered, while carefully avoiding conditionality- and supply-driven approaches (especially given the substantial increase in GPG trust funds). New Zealand encourages the development of global-level frameworks, which provide incentives to countries including financial mechanisms for incremental costs, as a positive response. We look forward to more concrete recommendations on how to address this challenge, and assur- ances that this issue will be seriously considered. World Bank New Zealand-Pacific Remittance Project During the past year a number of New Zealand government agen- cies, in conjunction with the World Bank, have funded and worked on the New Zealand-Pacific Remittance Project, aimed at reducing the 114 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 115 transactional costs of remittances in the Pacific region. These costs can be anywhere from 15 percent to 25 percent of the value of the remit- tance and the World Bank has identified that remittances to the Pacific region have tripled over the past decade to reach US$425 million. As an outcome of this project, the government recently approved a new regulation under the Financial Transactions Reporting Act to encourage the development of a more competitive remittance market, with greater transparency, a wider use of formal channels and better informed consumers. This should result in a significant reduction in the costs of remitting money and represents a very practical way to con- tribute to the well-being and quality of family life in the Pacific. PAKISTAN: SHAUKAT TARIN Governor of the Bank We are meeting at perhaps the most tumultuous times the world is witnessing since the establishment of Bretton Woods Institutions. For the last more than one year we have seen a series of successive shocks that were unleashed in the wake of sub-prime crisis. Oil and food prices shocks have affected the developing countries most profoundly, and we are still reeling under their aftermath. In the days ahead, the situation is likely to be compounded by the second round effects of the on-going financial crisis. In the case of Pakistan, we are not merely facing the economic con- sequences of the global crises but are playing the role of a frontline state against the war on terror. If on the one hand, more than 100,000 of our troops are battling a ferocious militancy, on other, our peoples in the main cities and federal capital are becoming victims of the suicide bombings. The loss of lives and economic cost imposed by this war are now rising to an unbearable level. There is a very negligible portion of these costs that is defrayed by our partners. We also had to face the challenge of democratic revival as well. Our people gave a resounding verdict in favor of democracy as the principal instrument that would rid the country not only of militancy but of their economic deprivation also. The battle of democracy has been won after great sacrifices, the most notable is that of our great leader Shaheed Mohtarma Benazir Bhutto, who bravely sacrificed her life but has kin- dled a light that would show us the way in dark alleys of war on terror. But unfortunately, the elected leaders have inherited an economy that was encumbered by the burden of subsidies accumulated due to unan- ticipated shocks of oil and food prices. I take pride in stating that despite the gravity of the challenges, the democratic government has not abandoned country's resolve to move forward and to do things right both in standing up to the call of fighting 115 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 116 the militancy as well as in preserving the market economy that we have evolved during the last two decades. We may be amongst the few coun- tries who have successfully adjusted to the unprecedented increases in petroleum and electricity prices by eliminating nearly all the subsidies. The pain inherent in this adjustment can be gauged by the fact that these prices have nearly doubled or will be doubled at the close of the adjustment. We have also successfully met the challenges of food short- ages both through timely imports as well as by aligning domestic agri- culture prices with international prices. On the monetary side, we are fighting rising inflation by interest rates adjustment and by containing the monetary growth. We have also set the goal to adhere to a zero net government borrowings target from the central bank. However, these measures have not been accompanied by the sup- port from our development partners that were needed to fully meet the needs of the economy. Even as the measures have helped contain the rapidly deteriorating macroeconomic framework the challenges remain on the horizon, and for this reason are equally determined to rise to their needs. It should be understandable that adjusting to these shocks was a painful process, particularly for the most vulnerable segments of our population. To mitigate their sufferings we are launching a major pro- gram of cash transfers to the poorest households in the country. We are conscious of the challenges that are typically faced in targeting this group, and for this reason we will seek Bank's assistance from its vast experience in this field. Although the multiple crises have been difficult to face, they have given us an opportunity to undertake a soul-searching exercise and identify the vulnerabilities that characterized our economy and society. Accordingly, we are drawing fundamental programs to further restruc- ture our economy and strengthen our institutions of governance so that we are better prepared to face such challenges in the future. Besides ensuring macroeconomic stability, our new program will be primarily aimed at poverty reduction. For this purpose, apart from cash transfers to the poorest households, we will provide health insurance, skills development opportunity for at least one member of the family, and a suitable development support that will create temporary employ- ment opportunities for each union council, which is the smallest admin- istrative unit. This program will be supported by initiatives to revitalize agriculture, make the industry competitive, meet the growing energy needs, raise capital and finance for development, remove infrastructure bottlenecks through public-private partnership and reinvigorate the institutions of governance so that a just and fair administrative machin- ery serves as the anchor for the implementation of a vigorous and ambitious economic program. 116 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 117 Mr. Chairman, we look up to our development partnership, espe- cially the IFIs, to help us lead this program, through both their advisory and financial assistance. We would also recommend that our bilateral partners also play their role within the larger framework that will evolve through active consultation with the IFIs. In closing, let me acknowledge the effective role both IMF and World Bank are playing in the economic development of Pakistan.We are look- ing forward to even stronger ties in the coming days so that Pakistan suc- cessfully meets the challenges posed by multiple global crises. PHILIPPINES: MARGARITO B. TEVES Governor of the Bank This year's meeting is taking place amidst tumultuous economic events. And our intensified collective and cooperative efforts are nec- essary to overcome these challenges that threaten to reverse the gains we have achieved in improving the levels of income and social welfare and reducing poverty incidence. Such stormy horizon imposes a sense of urgency and significance in the gathering of international financial leaders here in Washington. We need a strong and coordinated action to steer and mobilize resources to meaningfully respond to these exceptional challenges. The exchange of views facilitated among distinguished financial managers and experts should enlighten and guide each of us in pursuing effective measures to combat financial and economic contagion. The IMF is well positioned to forge a multilateral response to arrest the deteriorating atmosphere and restore order and discipline in the global financial system. Likewise, enhancement of the Fund's financing facilities and easier access thereof are necessary to better assist devel- oping economies insulate themselves against the adverse effects of the financial turmoil. We welcome a comprehensive review of the Fund's financial instruments including reforming its Exogenous Shocks Facil- ity to cater more effectively to the needs of its developing members under the current volatile environment. A more proactive surveillance of economic developments in developed economies and deeper analy- sis of policy and regulatory interventions would be most useful in set- ting appropriate macroeconomic and financial responses. The external shocks from the global financial crisis and economic slowdown likewise pose daunting challenges to the World Bank. While efforts to preserve its strong capital position and financial standing should be strongly pursued, the Bank needs to design more innovative and quick-response products to sharpen its developmental role for its developing constituents. The pricing reforms and various innovative products earlier introduced by the Bank are significant steps to address 117 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 118 the demand for more cost efficient ways of doing business with this institution. Such initiatives serve as incentive for the Bank's developing members in addressing the growing and more complex financial and economic risks created by the current hostile global conditions. Although global commodity prices have started to ease, current lev- els remain historically high. Food supply and price levels, particularly those of rice, continue to be a priority concern for most developing countries given its immediate impact on the poor. Prospects for a benign oil price environment, including those for other critical com- modities, still do not appear firm. This uncertainty in the supply and price of basic commodities imposes a new responsibility for the Bank in view of its mandate to reduce poverty. We therefore fully appreciate the endorsement of the World Bank's Group's "New Deal on Global Food Policy" and the establishment of the new $1.2 billion rapid financing facility. As a middle-income country, we are pleased to have made an indirect contribution to the plight of the low-income countries through the use of the IBRD surplus in the setting up of a Trust Fund for the poorest and most vulnerable countries as part of the "Global Food Crisis Response Program."Acknowledging the funding limitation of the Program, strong coordination with other development partners and within the World Bank Group is essential to mobilize greater resources and expand the reach of the Program. We also call on the International Finance Corporation to generate greater and more enthusiasm for private sector engagement in agriculture and infrastruc- ture development to achieve our multiple development priorities for economic expansion and competitiveness. We likewise reiterate our strong advocacy for the Bank's active col- laboration and faster harmonization process with other development parties converging towards the adoption of country systems. The broader adoption of country systems would promote country owner- ship and streamline processing and implementation of foreign-assisted development projects. The Bank should demonstrate its leadership in adopting good gov- ernance principles. Accelerating the Reform in Voice and Participation in the Bank would be a solid manifestation of this commitment. With an agreement reached on the Quota and Voice Reform, we hope that the Bank can show progress soon, in many aspects of the reforms on Voice and Participation, including their timely implementation. We fully subscribe that the developing countries' need to be given voting strength factoring into the equation such variable as poverty. The tasks at hand are daunting but not insurmountable. But the episodes of previous crisis point to the important lesson for all of us to work closely together to successfully navigate through this turbulent jour- ney and return to a path of robust growth and significantly reduce poverty. 118 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 119 POLAND: PAWEL SAMECKI Governor of the Bank It is a great honor for me to participate in the Annual Meetings of the World Bank and International Monetary Fund. It is extremely important to gather here and I am grateful to the staff of the Bank and the Fund for their efforts in organizing this event. When we met last year, we reflected on potential risks linked to the turmoil on financial markets. Today we know that most of these risks have turned, unfortunately, into real problems that we need to face. We are observing diminishing confidence to and within the banking sector, massive support actions by central banks and governments, as well as decreasing growth rates across the developed world. Developing economies have been rather resilient, but they are still faced with the huge challenges of food and oil prices. Inflation has reached double-digit rates in many parts of the world. Tighter credit and liquidity conditions are expected to limit investments. These prob- lems complicate significantly the task of monetary authorities world- wide. They may also slow the pace of growth that has helped in lifting many people out of poverty in the last decade. In brief, we have just entered a global uncertainty, and although the roots of the problems lie in the policies and behavior of financial entities in certain countries, the global institutions should help put things back to order. The severity of the current financial turmoil showed that there was no clear warning system that could have identified symptoms of forth- coming turbulences and help mitigate negative spillovers. Such a sys- tem would require effective regulations for financial sector and coop- eration between national financial supervisors. At the same time, the depth of the crisis provoked an intensive debate on how far the national institutions can go with using taxpayer's money for reforming country financial systems. Nevertheless, the uncertainty surrounding the potential economic consequences calls for rethinking the role of the global institutions. The question arises how challenges linked to the international consequences of internal financial crises should be moni- tored and analyzed. There is a crucial role to play for the International Monetary Fund in restoring confidence and proper functioning of the world financial mar- kets. It is important to underline the Fund's role that is to be based on effective surveillance. This should cover fundamental macroeconomic linkages between the financial sector and the real economy. The IMF's cooperation with the Financial Stability Forum should result in a strengthened prudential financial regulatory framework, implemented and adhered to across the whole membership. Against this backdrop we consider the Financial Sector Assessment Programs (FSAP) to be one of 119 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 120 the key elements in the Fund's toolbox, which provides the governments with clear guidance on preventing and coping with the crisis.As a sign of the importance of the FSAPs we note that the FSAP-recommended enhancement of the cross-border cooperation between the national financial regulators has been thoroughly tested in the recent days. The Polish financial system still appears to be highly resilient to the turmoil, with no evidence of contagion effects. Nevertheless, there are risks that the slowdown in the euro area will negatively impact the near term growth prospects of all Central and Eastern European countries. Unfortunately, the problems of the financial markets have coincided with a global rise in oil and food prices, as well as with the need to coun- teract global warming. We highly appreciate the World Bank Group's work on global public goods, and, in particular, on reconciling develop- ment and climate issues. We welcome the country-led, knowledge- based, and results-oriented approach presented in the Bank's Strategic Framework. We share the opinion that taking steps against climate change should not compromise progress towards achieving the Millen- nium Development Goals. It should also take into account the specific situation of both developed and developing countries that heavily depend on carbon-intensive energy sector. Global development issues are broadly related to the global gover- nance. We welcome the process of the reform at the Bretton Woods institutions, with its objective to enhance the voice and representation of developing and transition countries. We also note with satisfaction the ongoing IMF governance reform, as well as the review of the Fund's lending framework, which aim at reducing overlaps and making financial instruments more coherent. Thanking once again the staff of both the Bank and the Fund for their work, I believe that these Annual Meetings will conclude in pro- viding guidelines necessary to find appropriate solutions to the eco- nomic challenges we currently face. RUSSIAN FEDERATION: ALEKSEI L. KUDRIN Governor of the Fund and the Bank Our Annual Meetings are taking place during an unprecedented crisis, which has shaken the very foundations of the modern financial system. The problems in the U.S. financial sector, stemming from the flaws in the regulation of financial institutions, caused a chain reaction around the world. The simultaneous movement of markets in various regions, regardless of the countries' macroeconomic positions, provides clear evidence of high interconnection of the financial systems and economies all over the world. It is obvious that the crisis can be resolved only through coordinated international efforts. Decisions 120 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 121 taken without due consideration of the consequences for other coun- tries could make the situation worse. The coordinated actions to lower interest rates undertaken by the main central banks on October 8 showed an example of international cooperation, but they were not sufficient to calm the markets. The situ- ation required a more systemic and comprehensive response. Further steps agreed over the past few days, such as the commitment by the G-7 countries to provide support to the financial systems in accordance with the agreed action plan and the agreement among 15 euro-area countries to act in coordinated manner provide a chance to start restoring confidence in the global financial system. The recent actions of the Russian authorities were broadly similar to the approach finally adopted by the G-7 and the euro area countries. The Russian Central Bank and the Ministry of Finance have allocated significant funds to maintain the liquidity of the banking system. In addition, the Central Bank has lowered the reserve requirements by a substantial margin. The parliament has significantly raised the level of deposit guarantees provided, introduced partial state guarantees for inter-bank credits, and allowed the use of public funds for the recapital- ization of commercial banks. Because of the difficulties being experi- enced by Russian banks and corporations with gaining access to exter- nal financing, the government has made a decision to provide public credits for refinancing private external liabilities. It should be under- lined that the level of foreign exchange reserves exceeds the total amount of Russia's external liabilities (private and public), which means we can be confident in the country's financial stability. One positive aspect for the global economy is the likelihood that the steady growth in domestic demand in major emerging markets will continue. The financial institutions of these countries have not accumu- lated troubled assets, but their banks and equity markets nevertheless turned out to be vulnerable because of the limited access to external financing and the withdrawal of funds by international investors on a scale reminiscent of the 1997­1998 crisis. This time, however, the emerging markets are better prepared for this sort of developments as a result of their adherence to responsible macroeconomic policies and the accumulation of significant foreign exchange reserves. Further- more, the relatively low dependence of consumer demand in these countries on credit means that one can expect this consumer demand to be more resilient to volatility in the financial markets. Despite the fact that the financial crisis is at the center of our atten- tion, we must not neglect the problems of low-income countries, for which the steep rise in fuel and food prices is a more significant factor contributing to the worsening of their economic situation. Many coun- tries that import food and fuel have experienced a serious deterioration 121 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 122 in their balance of payments as well as a decline in reserves, while the majority of low-income countries are now facing higher inflation. The rise in import spending threatens the gains in reducing poverty that have been made in recent years. Low-income commodity-importing countries need help from the international community to ease their adjustment to the new situation. We, therefore, welcome the attention that the Fund is giving to low-income countries, especially those that find themselves in a difficult situation owing to a drastic deterioration of the terms of trade. In particular, the reform of the Exogenous Shocks Facility (ESF), which streamlines the conditions for access to the Fund's resources for countries that have experienced such shocks, is a timely step. We also welcome the concrete actions taken by the World Bank within the framework of the $1.2 billion Rapid Financing Facility to provide assistance to low-income countries that have been hit by higher fuel and food prices. One thing is clear to us: No matter how the current financial crisis ends, it is obvious that the world will be a different place afterwards. There needs to be a complete reassessment of the role of financial mar- kets and approaches to their regulation and to international coopera- tion in this realm. It is already clear now that the ideology of deregula- tion of the financial sector as a means of increasing its effectiveness reached a dead-end. Approaches to liberalization of capital transac- tions also need to be re-examined in view of the destabilizing effect that emerging market economies may experience as a result of large- scale capital inflows as well as similarly massive outflows for reasons arising exclusively from external circumstances. We need to figure out whether the principles of targeting inflation without taking asset prices into account were correct, and analyze the reasons for the appearance of excess global liquidity and the occurrence of speculative "bubbles." The system of economic and financial regulation currently in place falls short of the one needed for the development of the world econ- omy in the context of globalization. The performance of the world economy is too dependent on the financial and economic policies of a few countries and clearly places many of its participants at a disadvan- tage. The existing mechanisms for the coordination of financial and economic policies are not working properly. It also seems that the Bret- ton Woods institutions are reacting more to accomplished facts rather than playing an active coordinating role in strengthening the interna- tional financial architecture. And this is in spite of the fact that main- taining global financial stability was at the center of attention of the Bretton Woods institutions following the crises of the 1990s. In this connection, we support the idea proposed by the World Bank President Robert Zoellick to establish a New Multilateral Net- work for a New Global Economy, within the framework of which a 122 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 123 new steering group could be created.We believe that this approach will allow us to strengthen the stability of the international financial archi- tecture through the design of effective mechanisms for the coordina- tion of financial and economic policies, and thus to be more successful in addressing other global problems, such as combating adverse climate changes. We believe that the World Bank and the IMF can and should play an important role in setting up these mechanisms. We also believe that the Bretton Woods institutions, and the IMF in particular, should devote more attention to the oversight of financial and economic poli- cies of large advanced countries, which have demonstrated serious weaknesses. Thought should be given to comprehensive measures aimed at minimizing contagion across countries so as to reduce the high price that emerging market and developing countries are forced to pay for crises that arise through no fault of their own. We believe that it is not possible to strengthen the role of the Bret- ton Woods institutions and increase their legitimacy without profound changes in their governance. These changes should lead to a genuine increase in the voice, influence, and participation of emerging market and developing countries in the decision-making process. In this regard, the recent quota and voice reform that was carried out at the IMF was clearly inadequate. These countries should be assigned a larger role within the World Bank and the IMF, both by increasing the number of votes they hold and by expanding their participation in the management and staff, based on fairness and transparency. We should stress that an increase in the voice and representation of individual emerging market and developing countries should not take place at the expense of reducing the votes of other countries in this same group. SIERRA LEONE: DAVID O. CAREW Governor of the Fund and the Bank (on behalf of the African Governors) Africa's economic expansion is expected to continue this year, although the external environment is showing less favorable signs. The global economy has slowed down, oil and food prices have reached record-high levels, and global financial markets are strained. The dete- rioration of the external environment poses significant challenges caus- ing great concern to many countries in our region. We are particularly concerned about the severe impact that high global food and oil prices are exerting on our economies and the wel- fare of our populations. These have already taken a heavy toll on the hard-won macroeconomic stability, economic growth, and poverty reduction gains in our countries. Riots have threatened peace and 123 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 124 stability in many of our countries, which are still grappling with deep scares on the social fabric. The current financial turmoil in the advanced economies indicate that the real economy is decelerating faster than earlier envisaged, with consumption, labor and housing markets weakening in both the USA and Europe. The confidence shocks continue to exert intense pressure on these economies, with money markets and lending standards tight- ening further. We have witnessed the crisis evolving from one of liquid- ity into that of solvency, in the process, creating a systemic problem of recapitalizing the financial institutions. While we share the view that public money should be used when there is a solvency problem, we urge the Fund to quickly develop a set of systematic principles that should govern such policy recourse for all countries alike. Africa has so far been relatively resilient to the current global financial crisis, but there are serious downside risks. The resilience has stemmed from, among others, solid macroeconomic fundamentals, pru- dent macroeconomic policies, and higher commodity prices. However, the sharper-than-expected downturn for advanced economies and its likely spillovers on emerging market economies such as China and India would have a negative bearing on the growth prospects of Africa. We would like, nonetheless, to reaffirm our commitment to prudent policies and structural reforms, especially those that would help the least able to cope with these external shocks, while consolidating the gains from macroeconomic stability. However, given the magnitude of the crisis, our countries cannot achieve the desired outcome unless and until the World Bank and the Fund step up their support to our policy frameworks, and help us address the short- and long-term impact of ris- ing food and oil prices. In this regard, we welcome the IMF's immediate responses that include some augmented access to the Poverty Reduction and Growth Facility (PRGF) for countries under this program and whose balance- of-payments has been severely affected by the current shocks. We also welcome the recent review of the Exogenous Shocks Facility (ESF) and we urge the Fund to expeditiously implement the facility in order to enable greater and faster access by countries in need of resources from this instrument. In the World Bank Group, we welcome the New Deal on Global Food Policy, including the Global Food Crisis Response Facility, which provides $1.2 billion as a rapid response financing, from which several of our countries have already benefited. We also support the intention of the World Bank Group to boost its overall assistance for global agri- culture to $6 billion from $4 billion over the coming year and increase its agriculture lending to Africa from US$450 million to over US$800 million. 124 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 125 Despite these efforts, we would still like to underscore that more financial and technical support is required to meet the needs of our countries in the present environment. In this regard, we urge the World Bank to increase its financing to scale-up Africa's investment in agri- culture, infrastructure, and other related areas, with the view to help reduce transaction cost and improve productivity. The World Bank Group needs to strategically take a comprehensive approach that encompasses the whole value chain of the agriculture sector, and to identify and remove all constraints from farm level all the way to trans- formation and export. The main cause of Africa's low agricultural productivity lies on the limited irrigation and use of productivity-enhancing inputs, including fertilizers, improved seeds, and pesticides. Thus, we call on the Bank and IFC to step up their support in irrigation and land management, and to facilitate access to inputs by farmers at affordable prices. The World Bank should also assist our countries in building market- ing and distribution infrastructure facilities in the context of regional integration, by providing adequate financing and technical assistance in support of our Regional Economic Communities (RECs). We continue to underscore the critical importance of lowering global tariffs imposed on our agricultural commodities, and eliminating subsidies introduced by the developed countries on their products. The distorting developed countries' agriculture subsidies and tariffs have left Africa at a comparative disadvantage, and will have to be tackled first if one aims to exploit the continent's agricultural resources and the related processing and manufacturing activities. The current hikes in food prices provide a suitable environment to make a breakthrough in removing subsidies since the developed countries' producers are already getting the best returns. More generally, there is a need to reverse the marginalization of Africa in global trade. To this end, we seek the IMF and the Bank's advocacy role in unblocking the WTO talks to allow a quick resump- tion and a successful conclusion of the multilateral trade negotiations on issues under the Doha Round in order to ensure fair and balanced international trade, and urge all members of the WTO to stay on course. Let me now turn to two important issues that are also of concern to us, related to the ongoing reform agenda at the IMF and the World Bank, namely, voice and representation, and technical assistance. We are encouraged by the promising prospects of the ongoing dia- logue in the World Bank Group to facilitate consensus building by stakeholders on a voice and representation reform package. In particu- lar, we welcome the establishment of a third chair for Africa, and urge its immediate implementation. While acknowledging the doubling of 125 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 126 basic votes proposed in the package, we are still calling for tripling of basic votes, or better, restoring their 1944 level. Furthermore, we call on the Bank to facilitate the increase of our countries' voting power in the IDA Board, moving towards achieving parity between developed and developing countries in the long run. We would also like to welcome the package adopted by the IMF Board of Governors on April 28, 2008, on quota and voice reform. However, while the agreement is broadly in the right direction, we con- sider it as an initial step towards enhancing and strengthening voice and representation of the African countries in the IMF Board. More needs to be done to enable a more effective voice and participation of African countries in the decision-making process of the IMF in particu- lar, and the Bretton Woods institutions in general, to restore their legit- imacy, including the establishment of a third chair for Africa at the Executive Board of the IMF. We acknowledge the progress made in enhancing diversity at the managerial level in the Bank, and we urge both the Bank and the IMF to do the same at all staff levels. A merit-based selection of the Heads of the Bretton Woods institutions, regardless of their nationality, also forms an important voice issue that needs to be achieved. Furthermore, the appointment of an African national as Deputy Managing Director of the IMF is long overdue. Regarding technical assistance, we reaffirm that the technical assis- tance provided by the Bretton Woods institutions is vital to our coun- tries' efforts to promote institutional capacity, macroeconomic stability, growth, and poverty reduction. In this regard, we welcome the increas- ing positive role played by the African Technical Assistance Centers (AFRITACs). However, we are deeply concerned about the potential impact of the current restructuring and refocusing of the IMF's activi- ties on the delivery of technical assistance. In particular, we caution that any decision to impose fees on technical assistance on countries should take into consideration the fact that IMF's technical assistance is a public good, and should therefore be financed, as a matter of prin- ciple, by the general membership. Finally, although our countries contribute the least to the carbon emission, they are the hardest hit by the climate change. Nonetheless, we are determined to play our role in the global effort to reduce the GHG emissions. We, therefore, call for availing us with adequate financial resources, mainly on grant basis, to enable us to play our role effectively. We urge all the stakeholders to expeditiously reach a new deal on the post-Kyoto Protocol under the auspices of the United Nations Frame- work for Climate Change. While we welcome the recent initiative by the World Bank to scale up its climate change activities, we urge the Institu- tion not to compromise its growth and poverty reduction focus. 126 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 127 SPAIN: PEDRO SOLBES MIRA Governor of the Fund and the Bank My address comes to you at a difficult time for the global economy. It is also a time at which our coordination is of vital importance in order to face the common problems we are experiencing, together. International Economic Prospects Global economic prospects have deteriorated since the last Annual Meetings, with a global growth projection of 3.9 percent, which is sharply declining. While industrialized countries have been hardest hit by this economic slowdown, the crisis is increasingly spreading to emerging economies as well. Financial Crisis In light of the developments in recent weeks, the international financial crisis has entered a critical phase, with a sharp decline in con- fidence, the consequence of which is the virtual paralysis of credit and interbank markets. As a result of the financial interdependence and the interconnect- edness of banks, countries are being affected by the turmoil, hence the need, now more than ever, to coordinate the policies we must imple- ment to avoid a worsening of the impact on the real economy. Against this backdrop, consideration of how best to tackle the diffi- cult situation without losing sight of the long term is needed. Macro- economic policies must regain their effectiveness and maintain stability--achieving these objectives entails, first and foremost, the re- establishment of confidence.To this end, a broad-based, comprehensive action plan with the highest level of coordination and participation possible is necessary. In the short term, therefore, it is critical to avoid an exacerbation of problems related to the credit squeeze, which result in solvency prob- lems that would not otherwise have arisen. It is critical that ordinary financial channels rebound, and the public sector has a key role to play in this difficult task. Europe The European financial and banking system is reeling from the impact of the crisis and the effects on the real economy will be felt. Under these circumstances, Europe has demonstrated the capacity to take unified and coordinated action. The staging of the first summit of 127 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 128 Heads of State and Government of the Euro Zone in Paris yesterday is a demonstration of the unequivocal commitment to act in a coordi- nated manner when facing systemic problems. The action plan agreed will help restore confidence and stability in markets. Also, the participation of the European Central Bank in the recent coordinated slashing of interest rates is another example of an effort to provide joint solutions to common problems. Spain's Economy Inevitably, Spain's economy is also being affected by the turmoil discussed. Based on our projections, the decline in activity will last into the coming quarters, with a major adjustment in the housing sector. Nevertheless, Spain's economy has structural strengths owing to the economic policies implemented during years of robust economic growth, which gives us reason to believe that Spain will return to its potential growth path in the medium term. These strengths include substantial capital accumulation in recent years, with significant improvements in infrastructure, human capital, and research and development; a very open economy, with companies capable of competing on international markets; healthy government accounts; and a robust financial system. Spain's financial system is solvent, efficient, and profitable, and we believe that it is well placed to weather the global financial crisis. Despite robust credit growth in recent years, lending practices have remained pru- dent under the strict supervision of the Bank of Spain. Provisions set aside in boom periods have been generous and have been bolstered by a counter-cyclical system of requirements imposed by the regulator. To avoid liquidity problems, the government approved the estab- lishment of a fund of up to EUR 50 billion to buy healthy assets from financial institutions, in accordance with market criteria. This fund sup- plements the measures adopted yesterday by the Eurogroup heads of government, which were approved today by the government of Spain. These measures include the possibility of temporarily guaranteeing the debt of banks for periods longer than six months, which, for 2008, may amount to EUR 100,000 million, as well as the possibility of providing capital contributions to financial institutions. While the latter measure is being adopted in conjunction with the decisions adopted in Paris, it is not expected to be implemented at this time. IMF Reform The most important item on the IMF agenda must be the response to the crisis, which poses challenges of a magnitude not seen in many 128 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 129 years. It is important to review the best short- and long-term economic policy responses, as well as the lessons to be learned from the financial crisis. We firmly believe that the IMF is in an ideal position to face these challenges, without jeopardizing collaboration with the interna- tional institutions in question. The IMF's comparative advantage is derived from its supranational and multilateral character. Specifically, it is the best-placed institution to identify overall inconsistencies when the sum of individual decisions may not be advantageous at the collective level. It is for these reasons that we believe that it is important to give the IMF a clear mandate, assigning it a key role as the multilateral organi- zation tasked with supervising and monitoring international financial stability. Furthermore, the credibility of its supervision must be bur- nished, thus enhancing its financial outlook and regional and multilat- eral prospects. Lastly, the Fund must be mindful of its role as financier and adapt it to the current situation. World Bank I would now like to discuss the World Bank's agenda. In an international context where changes are occurring at a rapid pace, the World Bank must prioritize its strategic guidelines and seek to promote coordinated actions among the various World Bank Group institutions and with other IFIs. We endorse the voice and representation process in which the World Bank Group is currently engaged. It is necessary to continue moving this process forward without delay, thereby enhancing the rep- resentation of the developing and transition countries. However, I also believe that the World Bank's capital structure and the representation of its members must be adapted to reflect their weight in the global economy and their commitment to development. We therefore wel- come the progress already achieved in the reform process, and will con- tinue efforts to reach an agreement as quickly as possible. Esteemed colleagues, we are confident that joint efforts will enable us to meet these challenges. SRI LANKA: SARATH AMUNUGAMA Governor of the Fund and the Bank The current economic crisis has many dimensions, including the bursting of the housing bubble, high energy costs and food prices, large macroeconomic imbalances among major players in the world economy, regulatory and supervisory failures, and the weaknesses of 129 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 130 our early warning systems. Although the latest financial market tur- moil began in advanced financial markets, the contagion of this crisis will not be confined to the boundaries of developed countries. Due to the increased economic interdependency among nations through trade, investment and sophisticated capital markets, it is likely that many countries will have to go through a difficult period in the near future. In that context, we believe that the IMF and the World Bank has an important role to play to safeguard global financial system stability and help maintain a sustainable level of development. At the country level all possible options should be explored to minimize the adverse conse- quences. In this regard a balanced approach of monetary, fiscal and other policies to help maintain productive investment is required. These policies need to be assisted by sufficient flexibility on the part of the Fund and the Bank to help those countries that may need urgent liquidity support and development assistance at this stage. We take positive note of the progressive steps taken by the manage- ment of the IMF and the World Bank particularly in regard to its reforms and new development financing initiatives. We cannot stress enough the importance of a contingent liquidity support facility for emerging economies. Similarly, we are confident that the issues relating to quota reforms of the World Bank group will be resolved taking into consideration the claims of developing and emerging market countries that are under represented in the current quota structure. Let me now turn to my own country of Sri Lanka. Given the high degree of openness of our economy we are by no means an exception to the pattern of our peers in the developing world. Sri Lanka is a net importer of commodities particularly oil. Our recent gains from com- modity exports have been more than absorbed by the sharply increased cost of the oil bill, which showed a threefold increase within a matter of two years. High food and energy costs have been the main cause of high inflation in the country.Thanks to the tight monetary pol- icy measures taken and good harvests, inflation, which reached a peak a few months ago, is now on the decline. A drop in oil prices to a rea- sonable level would be a great advantage. Sri Lanka's financial system has shown strong resilience to adverse global developments. With the implementation of Basel II in 2008, the regulatory framework of banks has been further strengthened. The comprehensive development programs that has been launched by the government to address the key constraints for more equitable growth has already raised the GDP growth rate to a satisfactory level of around 6.5 percent compared to the historical average of around 4.5 percent in the past. There has been a sharp reduction in unemploy- ment. Our growth momentum is expected to continue and register 130 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 131 around 7 percent in 2008, particularly benefiting from improved per- formance in the agriculture sector. The poverty indicators as well as many other indicators relating to MDGs in Sri Lanka have shown remarkable progress in recent years and we need to sustain these achievements. My country has achieved most of the MDG goals. We are pleased that the World Bank has already committed US$900 mil- lion through the new country Assistance Strategy. I conclude with the wish that through the concerted efforts by all parties, particularly the key players in the world economy, we will be able to recover from this crisis and continue the effort to give a better life for all our people. SUDAN: AWAD AHMED ELGAZ Governor of the Bank (on behalf of the Arab Governors) It is an honor for me to deliver this year's joint Arab speech on behalf of my colleagues the Group of Arab Governors for the Interna- tional Monetary Fund (IMF) and the World Bank. We welcome the states that joined our two institutions during the last year. At the outset, we would like to express our concern in respect of the current serious conditions of the global economy not experienced since the 1930s. Economic activity is going through a sharp downturn in many developed economies, with some of such economies entering real economic recession. Developing country and emerging economies have started to be impacted by financial turbulence, leading to downturn in growth rates lately. Such downturn resulted from the prolonged prob- lem, increased external financing crunch, and inflationary pressures. Moreover, markets have become careful to distinguish among coun- tries according to external imbalances affecting them. Global economic downturn emanated from financial crisis caused by the real estate mar- ket in the United States and the vicious cycle involving the financial sector and the real economy. Consequently, economic policy makers are facing increased difficulty in tradeoff choices between inflation, growth and financial stabilization. Credit risks are still high despite measures taken by developed economies--including assistance extended by respective governments and steps taken by central banks--to curb difficulties in finance mar- kets. Consequently, we stress the need for swift addressing of current crisis at the international level with close coordination among coun- tries. Comprehensive measures need to be taken to ensure restoration of trust and confidence to the financial sector. A crucial measure to be taken in the short term involves making liquidity available, addressing bad assets, and injecting capital into the financial markets. Supervisory 131 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 132 and regulatory systems must be enhanced to ensure financial market stability and obviate recurrence of such crises. In addition to efforts aimed at addressing this international finan- cial crisis, we call on the world community to increase attention to addressing the current crisis experienced worldwide in the form of soaring commodity prices, particularly food prices, which may lead to increasing the number of poor people by about 100 million persons, leading to enormous financial burdens for low-income countries, par- ticularly in Africa. As we welcome the various efforts taken to tackle the different aspects and root causes of the current crisis, we note ini- tiatives taken by the World Bank in support of such efforts. Yet, we look forward to further effective measures such as increased assistance to World Food Program, helping developing countries to modernize their agricultural sectors and increase production and productivity with a view to achieving desired food security. We also note the role con- tributed by IMF to support balances of payment and extend additional financial assistance. Further, we welcome updating streamlining of "External Shock Response Facility" to make it more useful for mem- ber countries. Donor Arab countries have contributed their role in mitigating suf- fering of the poor and increasing investments in agricultural sector. Special mention should be made of the $500 million grant extended by the Kingdom of Saudi Arabia to the World Food Program as well as the generous aid extended by: Kuwait, Qatar, and the United Arab Emirates. In this context, we call on industrial countries to contribute a vital role to address the current crisis and take the initiative in reducing subsidies for their agricultural products as well as restrictions imposed on their imports of the same. Such subsidies and restrictions are stifling development of agricultural sectors in developing countries. Further, we call for cessation of using agricultural products for biofuel produc- tion as this has led to escalation of the crisis and increased food prices. Turning to the role contributed by IMF to achieve monetary and financial stability worldwide, particularly in light of potential adverse impact on global economy due to current financial crisis, we believe that, to enhance that role, developing and emerging countries should have a clear and obvious voice at IMF. In this respect, we welcome selection of a first chairman from a developing country to head the International Financial And Monetary Committee. Moreover, IMF should enhance its oversight role and apply the same in an equitable manner to policies of all member countries, including developed coun- tries. As far as emerging economies are concerned, we encourage IMF to explore new mechanisms that provide to such economies rapid finance to protect such economies from adverse economic crises. Fur- ther we believe that IMF should adopt a budget that will facilitate 132 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 133 undertaking such a required role. In this respect, we call for swift adop- tion and implementation of resolutions related to enhancement of IMF income. We are apprised of a decision to charge fees for technical sup- port IMF extends to member countries. This may lead to alienating developing countries from IMF and denying such countries necessary technical assistance. Accordingly, we stress the need to reverse applica- tion of such a decision as soon as possible to prevent any resulting adverse impact. In view of growing importance of sovereign funds to international financial system, we note the positive role contributed by such funds through providing capital to markets of developed economies during this year's financial turbulence. These funds target long-term invest- ments and shun speculation and noncommercial objectives. In this con- text, we stress again the importance of preserving voluntary nature of principles and practices agreed in respect of such funds, without any mandatory control. Respective principles should be subject to laws, obligations and practices effective in countries to which each such sov- ereign fund belongs. The Arab group of states is attentively monitoring increased activ- ity by the World Bank in support of developing country efforts to address consequences of climate change and risks emanating from it. We stress that such increased attention to such issues by the Bank should not have adverse consequences for remaining development pri- orities and programs of the Bank, particularly efforts related to sup- port for growth and poverty reduction in developing countries. More- over, we stress the importance of coordination with specialized international organizations in this respect, especially the need for respecting ratified international covenants and conventions. We appreciate efforts aimed at reaching a consensus that may enhance role of developing countries in decision making as well as out- comes of Development Committee deliberations about proposals in this regard. We look forward to real improvement in developing coun- try voice in the coming Spring Meetings of the World Bank Group. We particularly refer to increase of total developing country voting rights towards parity with those of developed countries, without adverse impact on the voting rights of any other developing country. We also look forward to more diversification in World Bank Group staff, partic- ularly an increase in staff members from developing country group. We would like to applaud the decision to create an additional chair in the World Bank Board of Executive Directors for Sub-Saharan Africa. We also call for a more open mechanism for selection of World Bank Group presidents and IMF Directors. Turning to developments in our Arab region, we note the fact that most countries in the region experienced continued good growth rates 133 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 134 in the past year despite global conditions of instability. Fruitful efforts continued in various areas of reform as well as adoption of sound poli- cies leading to more open trade and obvious progress in areas of gover- nance, accountability, and improved investment climate where some of our countries achieved top rankings. Moreover, increased inflows of financial resources into oil exporting countries led to increased invest- ment outflows to developing countries, enhancing south-south eco- nomic relations. Careful to achieve world oil market stability, Arab oil-producing countries increased investments with a view to increasing oil produc- tion and exports. They also continued close cooperation with oil con- suming countries. It should be noted that oil price increases did not result from constraints related to the supply-side. They emanated from factors related to: world demand and limited refining capacity due to weak investments in refining capacity, unfair taxes imposed by devel- oped countries on energy resources, as well as speculation, which have become an outstanding characteristic of oil markets. Economic growth in Arab countries coincided with accelerated inflation rates emanating from: higher world prices of commodities, local demand increases, and bottlenecks in local production capacity particularly in housing sectors. The challenge facing policies of Arab countries, especially low- and middle-income countries, lies in: securing food requirements of their peoples, strengthening of growth and con- tainment of inflation, and retaining proper levels of foreign exchange reserves. Many Arab countries have taken measures, including social assistance, to protect low-income groups from the impact of world price increases. Varying conditions of our countries exposed many of them to impacts of lower global economy growth and commodity price crisis, particularly food prices, as well as instability of world markets and recurrent droughts. In addition to efforts made by our countries to address such challenges, we commend efforts made by the World Bank Group in our region through increased loans and credits as well as ini- tiative included in World Bank strategy to support economic activity in the Arab World. We particularly commend the initiative presented by Mr. Zoellick. We look forward to a comprehensive plan identifying respective priorities, accelerated implementation of this initiative, and allocating more attention to regional projects that lead to more open- ness as well as projects aimed at addressing unemployment and expanding private sector development. We call for increased attention to Arab countries suffering effects of conflicts.We recommend more flexibility in dealing with such countries and the need for combined efforts and cooperation between all organi- 134 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 135 zations and agencies concerned to spread benefits and ensure maxi- mum impact of aid extended. While commending the role contributed by IMF and the World Bank in this respect amid difficult circum- stances, we call for continued efforts by the World Bank Group in our region to provide effective support to address sufferings of the Pales- tinian people under occupation, building their economy and ending the blockade and closures.We call for reconstruction of Iraq, re- engagement with Somalia and eliminating debt burdens of the Sudan, especially since peace agreements have been concluded. Progress and stability in those countries will undoubtedly benefit all in the region and the world at large. We reiterate our urgent call to IMF and the World Bank Group to recruit appropriate numbers of Arab country nationals at all manage- ment levels, particularly higher management levels. It is important that Arab country nationals be accorded appropriate career advancement opportunities as current recruitment and professional promotion ratios are very low compared to those from other similar regions, especially as many staff members from our region lost their jobs due to restruc- turing at IMF this year. Finally, we understand well that we still have a long way to go in our efforts to overcome challenges and achieve more progress because our Arab region is characterized by different circumstances and conditions and faces many of the challenges affecting developing countries. We look forward in this respect to continued close cooperation with IMF and the World Bank Group as well as all our development partners. SWITZERLAND: JEAN-PIERRE ROTH Governor of the Fund The global economy faces its most difficult period for decades as the turmoil engulfing financial markets and institutions has intensified. The deep crisis of confidence in financial markets represents extraordi- nary challenges for macroeconomic and regulatory policies. An ade- quate and internationally coordinated response to these challenges is more important than ever. It should aim at mitigating the short-term impact of the current turmoil, while ensuring that the right lessons are learned for the global financial system to function more smoothly and consistently in the future. Confronted with this challenge, the immediate response to the financial market turmoil by various public authorities in recent months has been adequate. They did their best to strengthen the financial sys- tem by providing liquidity, lowering interest rates and intervening in markets during critical moments. Unprecedented systemic challenges 135 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 136 have prompted unprecedented government measures. In the medium and long term, however, crisis containment measures should be accom- panied by more forceful regulatory measures.Three measures in partic- ular ought to be mentioned here. Capital requirements--risk-weighted capital requirements--must be increased. The leverage ratio of large international banks must be contained. And finally, liquidity buffers must be reinforced. Dealing with the crisis has been made more difficult by the absence of coordination of government interventions. A more pronounced col- lective effort might prove useful now, or in the future, once this crisis is over. The Fund should be a partner in such a collective effort. Its con- tribution should build on the close cooperation with other interna- tional fora, the Financial Stability Forum (FSF) in particular. The Fund should contribute to this effort by building upon its comparative advantage.The Fund has a global membership.This will allow the Fund to identify more easily global financial risks; to disseminate policy les- sons and best practices; and to provide feedback to international stan- dard setters. More fundamentally, the Fund has the unique capacity of being at the crossroads of financial sector surveillance and macroeco- nomic surveillance. Macrofinancial linkages should become the bread- and-butter of the Fund. While the outlook for the global economy is worrying, it would be wrong to succumb to pessimism. The same dynamic forces that weigh on the global economy today will eventually allow countries and their financial sectors to recover. This is not the first and will not be the last difficult period of economic disruption with global repercussions. We are firmly of the view that we must not underestimate, and should be confident in, the fundamental strength of market forces to improve economic welfare. In the months to come, the Fund and the World Bank must jointly and in line with their respective mandate undertake a deeper assess- ment of the impact of the crisis on growth and poverty at a country level, both from a short- and medium-term perspective. They should provide vulnerable countries with policy advice and capacity building, as well as quick and flexible financial assistance where necessary, to mitigate the negative impact on macroeconomic stability, growth and poverty reduction. The Annual Meetings provide a welcome opportunity to briefly take stock of the work done by the Fund and the World Bank. At the Fund, good progress has been made in assessing its role and the ade- quacy of its instruments in all main areas of its activity: surveillance, lending, and technical assistance and training. However, much remains to be done. 136 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 137 The Fund's Policy Agenda Surveillance remains the most important pillar of Fund activity. The just completed triennial review of surveillance has confirmed that Arti- cle IV consultations--and the analysis and advice they offer--are highly valued by country authorities and market participants. These consultations should be further adapted to the global challenges and enhance their focus on core areas. And one of these core areas is the linkages between the financial sector and the real economy. It is in this area that the Fund, as mentioned above, adds particular value. The surveillance framework has been reinforced by the adoption of the 2007 Surveillance Decision. The Decision has given more promi- nent focus to external stability.This is welcome, as are the newly agreed procedures, which clarify how this Decision will be implemented in cases where further fact-finding and dialogue is needed. A key but not the only element of the focus on external stability is the focus on exchange rate issues. In this regard, two aspects are worth mentioning. First, more effort should be devoted to assessing exchange rate regimes rather than to exchange rate levels; fact is that it is notoriously more difficult to assess exchange rate levels than regimes. Second, exchange rate assessment should be better integrated with the overall assessment of macroeconomic and external stability. Fund lending is likely to resume because of the current financial dif- ficulties that have started to spread to emerging markets. The current lending instruments together with the activation of the emergency pro- cedure put the Fund in a good position to respond to today's challenges. This being said, we remain ready to discuss new lending instruments. As regards technical assistance, there has undoubtedly been progress in establishing an accurate and transparent costing that reflects international best practice. The new policy for country contri- butions, although limited in scope, will enhance ownership by recipi- ents and encourage careful use of limited resources. Finally, the work on a new sustainable income model has taken a big step forward. Nonetheless, not all the uncertainties have been resolved so far. The Resolution allowing the broadening of the Fund's investment authority has yet to be ratified by all members. And mem- bers ought to formally consent to gold sales as soon as possible. Commodities Crisis The World Bank and the Fund have an important role to play in helping countries to respond to the high food and fuel prices. The Fund is appropriately addressing the macroeconomic implications, including 137 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 138 through balance of payments support. The World Bank Group, with its strong presence at country levels worldwide, is very well positioned to address the short- and long-term components of the crisis. Since April both institutions have demonstrated through the Global Food Crisis Response Program their ability to tailor appropriate policy responses to the needs of developing countries affected by the food price crisis. As many partner countries are also affected by the impact of fuel prices, additional interventions are necessary and useful such as the Energy for the Poor Initiative. Given the extent of the challenges ahead, both insti- tutions must remain vigilant. Close coordination with the United Nations will be paramount. Possible trade-offs between emergency needs and long-term sustainability must be assessed. At the same time, the prospects for higher and more stable food prices also represent an opportunity for further poverty reduction in rural areas, and incentives for higher production. Small farmers should also be able to benefit from higher market prices. The Bank has an important role to play in tapping these opportunities. I welcome the planned increase in resource allocation to the agriculture sector, as part of the strategic directions of the World Bank Group. Voice and Participation Enhancing the voice, participation, and representation of developing and transition countries (DTC) in the World Bank Group is essential to better reflect today's realities. Switzerland is ready to join a consensus on the adoption of the proposed first stage of concrete options, pro- vided that we do not re-consider this outcome later on. In addition, the sequencing and deadlines for the work program of the second stage relating to completion of the review of IBRD shareholding must be fur- ther clarified. We strongly believe that the actual outcome of the IMF quotas negotiation must remain the starting point of such a review. We look forward to periodic reviews of the progress and concrete proposals for realignment of Bank shareholding as part of a compre- hensive reform package. Strategic Framework for the World Bank Group on Development and Climate Change The poorest countries will suffer most from global warming; we wel- come the integration by the World Bank Group of the climate change dimension in its core mandate of development and poverty reduction. We agree with the guiding principles of the Strategic Framework, which acknowledge the primacy of the UNFCCC process and ensure consistency with the recommendations of the Bali Action Plan. Other 138 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 139 key principles, such as focusing on World Bank group comparative advantages, partnering with other multilateral and bilateral actors, and mobilizing the private sector, are also important. We welcome the multi-sector dimension of the Strategic Frame- work; we thus expect sectors such as agriculture, land use, rural devel- opment, as well as water management and use to become more promi- nent in the Bank Group's operations. We encourage in particular the Bank to pay more attention to regional water and energy issues, espe- cially in Central Asia. In view of the huge financing needs for mitigating and adapting to climate change, we support the Bank Group efforts to mobilize and leverage resources from the public and private sector. Creating sound regulatory frameworks and structuring innovative instruments to crowd in private sector investments is critical; we are convinced that the Bank Group has a key role to play in this respect. The new Climate Investment Funds are a significant channel to scale up resources. We commend the Bank for its instrumental role in setting up the CIFs. Switzerland is participating in the setting up of the Strategic Climate Fund and is looking forward to being part of the `Scaling-up Renewable Energy Program' in low-income countries. In addition, we strongly encourage the World Bank group to increase its engagement in renewable energies. Strategic Directions of the World Bank At a time of increasing global uncertainties and great challenges, we believe that a renewed discussion on the Bank's priorities is para- mount, with a view to reaching consensus on a concrete, concise, and results-oriented strategic framework. The foreseen discussion on the medium-to-long-term IBRD capital use provides a renewed opportu- nity for close interaction between management and the board to advance this agenda. THAILAND: SUCHART THADA-THAMRONGVECH Governor of the Bank I am honored to have an opportunity to address at this 2008 World Bank/IMF Board of Governors' Annual Meeting today. On behalf of the Thai delegation, I would like to express my appreciation to the World Bank Group and International Monetary Fund (IMF) for host- ing this meeting. This year's meetings take place at a challenging time for the world economy, particularly amid the financial turmoil in the US and Europe. Thailand and Asian countries had experienced similar and severe pain 139 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 140 in 1997 crisis.We fully understand and realize the hardship and severity as well as consequences of the financial meltdown. We would like to give our full support and encouragement towards the great efforts already made by the US administration on the bailout packages, which hopefully will keep such a financial upheaval at bay in the near future. We are now faced with increasing financial volatility and every economy will unavoidably be affected more or less. Global financial volatility is likely to have crucial impacts on our growth, economic sta- bility, and development for years to come. So, there must be cohesive and cooperative visible hands that assist and play pivotal role in pre- venting or lessening the detrimental effect of financial volatility on growth, stability, and economic development. The IMF and the World Bank should actively take part in this endeavor. As when the volatility spreads, it will hit the developing countries harder with a longer period of suffering. We would like to urge that more assistances and relaxation in terms of funds and trade should be given to those smaller economies. More importantly, the developed countries should make every effort to resolve this crisis rapidly and introduce preventive measures to avoid stagnation on trade and devel- opment of the developing world. To tackle the imminent effect of current outbreak, Thailand at the outset has been in full alert and abruptly laid down precautious and proactive measures through extensively engaging ourselves in regional financial cooperation with ASEAN and ASEAN plus 3. These, for example, include an acceleration of economic integration in ASEAN plus 3 regions to cushion the impacts of the financial turmoil. Specifi- cally, measures include CMI Multilateralisation process, which will help ASEAN, plus 3 member countries address short-term liquidity prob- lem or the balance of payments difficulties. A study on bond financing for infrastructure projects under the Asian Bond Markets Initiative (ABMI) and Credit Guarantee and Investment Mechanism (CGIM) in the form of a trust fund are also in the pipeline. I would like to reiterate on the objective of the World Bank, which is to create "a world free of poverty." Today, the objective is still going strong with the World Bank bolstering the reduction of poverty as an overarching goal. Within this effort, I praise the World Bank in its strive to alleviate poverty in developing countries with sustainable eco- nomic growth by encouraging the poor to take part in development. Thailand also considers poverty eradication a serious and utmost urgent target to be achieved. This evidence on eradicating poverty has been placed amongst the top priority missions as mirrored in the gov- ernment's national agenda. I cannot deny that the problem of poverty in Thailand had long been accumulating with the real causes deeply rooted. Past attempts to 140 6135-CH03_p092-159.pdf 4/2/09 2:48 PM Page 141 fight poverty had mostly addressed the symptoms and not the real causes. Approaches tended to be piecemeal and unfocused rather than comprehensive and sustainable. Thailand believes that in order to reduce poverty, we must bestow opportunity upon the poor and less fortunate group of people. Since Thailand has declared war on poverty, many programs to help the poor have been implemented. These are targeted towards People's Opportunity policy. These include debt suspension program, People's Budget Project or SML, the establishment of the "Village Fund" for villages and urban communities, and the "People's Bank" to give the poor better access to formal financial services and funding. We have also aimed at creating jobs and enhancing productivity in the commu- nities through the establishment of the "One Village, One Product" Project. We are confident that we are on the right track of combating poverty and hope to alleviate and eliminate the poor distress permanently. Let me now turn to matters relating to the World Bank Group. Thailand and the World Bank have been in a development partner- ship for many years now. As time evolved, the relationships between Thailand and the Bank Group have also progressed from primarily a borrower-lender relationship toward a knowledge sharing develop- ment partnership. We are pleased to note that this year the World Bank has just completed "Thailand Country Partnership Strategy Completion Report" which represents an assessment of the World Bank's 5 years contributions in Thailand under the current Country Partnership Strategy (CPS) endorsed by the Board of Executive Directors in December 2002. Under the CPS, the World Bank has provided support and imple- mentation of the overall reform program through technical support, capacity building and specific project interventions that align with Thailand's national development agenda built around 5 pillars; these include Human and Social Capital, Competitiveness, Poverty and Inequality, Natural Resources and the Environment and Public Reform and Governance. On this regard, we would like to thank the World Bank for your con- tinuous and constructive efforts made throughout this project. We look forward to working closely in partnership with the Bank again to imple- ment the next level of the CPS in the years to come as this partnership showed to be a successful and significant step to effectively contribute towards poverty alleviation and economic growth in Thailand. The World Bank this year has released the 2009 Doing Business report. From the outcome,Thailand has moved six places up the ranking 141 6135-CH03_p092-159.pdf 4/2/09 2:48 PM Page 142 from 19th position to 13th. This higher rank in the Doing Business report was largely due to the recent reforms in registering properties, protecting investors, trade across border through the adoption of e-customs, paying taxes through e-revenues as well as the improvement of our business climate by easing the cost and days of doing business in the country. We would like to praise the Doing Business team for their consis- tent efforts and hard work throughout. It is no doubt that the Doing Business indicators have proved to be very useful source of input to policy makers, business owners, as well as foreign and Thai investors that intend to do business in Thailand. Policy makers especially can use these indicators to improve their business environment and making every country becoming more competitive. I therefore would like to complement this excellent initiative. This year the donor community has marked yet another astonish- ment. The funding contributed for the 15th replenishment of the Inter- national Development Association (IDA 15) has been marked as one of the largest donor funding since. It is recorded that IDA 15 represents a 43 percent increase from IDA 14, complemented by US$16.5 billion in internal financing from the World Bank Group and prior donor pledges for financing debt forgiveness. On our part, Thailand being one of the subscribing countries has long been supportive and engaging in the funding of IDA, which aims at helping the world's poorest countries. We would like to thank the donor countries for the funding contributed for the IDA 15. This demonstrated that the donor community is fully committed to helping countries overcome poverty and achieve sustainable growth, especially in the world's poorest countries like Africa. We hope to see that the fund will be accessible to all, especially those countries that are the poorest, post-conflict countries or weakly performed countries. Therefore, we urge the Bank and the donors to take this into account when reviewing the performance assessment. Criteria such as vulnerabilities and other factors should not be ignored. Thailand has been an active participant and a major provider of financial and technical assistance to neighboring Greater Mekong Sub- region (GMS) countries through our Neighboring Countries Economic Development Cooperation Agency (NEDA) for the implementation of priority sub-regional projects. Scopes of activities, inter alia, trade facil- itation, capacity building, and infrastructure financing. Currently, the assistance provided for these countries are still limited. Therefore, we urge the World Bank to consider assisting these countries in term of more financial support. We welcome the progress on the Bank's reform to enhance voice and participation of developing and transition countries (DTCs) in the 142 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 143 World Bank Group. In line with the spirit of the 2002 Monetary Con- sensus, we believe that increasing voice and participation of DTCs is central to the Bank's reform. As such, we support the main objectives and the guiding principles set forth in the Bank's reform, to enhance the participation of all developing and transition countries in the Bank's governance; and to further enhance the legitimacy, credibility, and effectiveness of the World Bank Group. Finally, we would like to stress to the World Bank and the IMF that diversity of staff will reflect the universality of its membership thereby enabling it to offer wide-ranging advice to countries from the perspec- tive of staff with diverse background and experiences. In this connection, I would like to touch upon the issues of the IMF. We note the progress, welcome the staff's commitment to the reform of the IMF, and look forward to ongoing improvements in gov- ernance, as well as modernization of its operational structures to ensure this global financial organization is well equipped to face cur- rent and future challenges. We welcome progress in the development of new income-expenditure framework to securely place IMF's finances on a more sustainable foot- ing. We also note the progress achieved in strengthening the surveil- lance role of the IMF to help prevent crises and promote domestic and international financial stability. We must, however, reiterate the impor- tance and call for firm and even-handed implementation of the surveil- lance framework, particularly, in view of the ongoing financial turmoil. We welcome the broad agreement to have IMF's lending mandate revamped and adapted in order to better reflect the realities of today's global financial system, and to address the imperative needs of low- income countries. We look forward to the upcoming review of condi- tionality associated with IMF facilities, as well as to the overdue pro- posals for new liquidity instruments, to ensure that the lending apparatus is up-to-date and relevant to all members. In light of the developments in the world economy, realignments of quota shares with members' relative economic positions remain on the IMF's reform agenda going forward. To this end, we welcome the agreement on the quota and voice reform package to recognize greater global weight of emerging economies, and urge for continuing consid- eration and work on this dynamic reform. In conclusion, we hope to see in the near future that the role of the World Bank will be transformed to meet with the global challenges and urgent problems such as Food and Energy Crises and Climate Change, etc. These risk factors will undeniably become the biggest threats to poverty eradication and development. 143 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 144 TIMOR-LESTE: EMILIA PIRES Governor of the Bank It is an honor and pleasure to address you all today. The rising energy cost, the growing demand for oil from industrialized countries and emerging economies, rising food prices, scarcity of land for agricul- ture and of water in many regions, climate change, are only some of the indicators of the serious challenges we have faced in 2008. Add to that the recent near meltdown in the global financial markets and 2008 may well be remembered as the year markets failed. However, it has not been all bad news. The developing world con- tinues to grow, albeit at a slower pace than before and therein may lie part of the solution to the current global crisis. When we in the devel- oping world face these types of crisis, which we do on a more regular basis than our colleagues in more economically advanced nations-- then we are repeatedly told to increase our openness to the global economy, to trust in the market but to regulate them well. To be honest this approach has worked. The economies of Asia, the Pacific, and Africa are still projected to grow and may well be part of the salvation of the current economic woes. However, for that to happen, we must make sure that in the effort to correct the market failures that have led to some of today's chal- lenges the world does not overreact and nations become more insular and protective rather than open and competitive. Improving the flow of capital, labor and financial resources from the developing world where economies are growing to the developed where they may stag- nate will be an important part of the recovery process. That is not to say that targeted intervention cannot help. Much like in the recent crisis where many Governments have seen the need for a large injection of liquidity into the financial system, many of us in the developing world have also had experiences (with equally mixed results) of trying to correct rapidly failing markets in a politically and economically charged atmosphere. Indeed, we may be able to share a lesson or two with some of our more developed partners in terms of how to intervene in markets. In Timor, we passed our own Economic Stabilization Act--but this was not in reaction to the recent financial crisis but the earlier rise in the price of basic commodities. Through targeted but limited interventions, this year has seen some positive developments, mainly in the return of the internally displaced peoples (IDPs) from the 2006 crisis; 25 out of 54 IDP camps have been closed. Cash transfers were made to vulnerable groups, including the elderly. Clear targets were set for improving basic health and education through the 2008 National Priority Program. 144 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 145 Responding to their genuine solidarity as a member of the interna- tional community, Timor-Leste (a least developed country) has also started to help other countries overcome hardships. Apart from donat- ing emergency relief to victims of Tsunami in Indonesia, Timor-Leste will contribute $1 million in support of the work of UNICEF globally, in 2009. In per capita ratio, this amount would exceed the assistance that has been provided by many developed countries. We do this not out of a sense of pride but out of duty and a feeling of shared understanding and responsibility. In Timor we realize we are fortunate that we are somewhat insulated from the winds of market failures currently blowing around the world. This is because we have revenue from natural resources that have so far shielded us. But we know that as a global partner what affects our partners ultimately affects us and therefore we too, even though we may be a small nation, have our role to play. Ultimately, global crisis like the current financial crisis will have to be dealt with by re-looking at global institutions like the IMF and World Bank to better prepare them for the challenges of the 21st cen- tury. 2008 has shown us that market failure and inability to regulate are not only problems for the developing world--but issues that deeply affect us all.Therefore, it is up to all of us in this room to look both col- lectively and individually at what can be done to create a more pros- perous world for all its citizens. TONGA: `OTENIFI AFU'ALO MATOTO Governor of the Fund and the Bank It is an honor to address the Boards of Governors of the Interna- tional Monetary Fund and the World Bank Group on behalf of the government of the Kingdom of Tonga. I would like to congratulate and welcome Mr. Dominique Strauss- Kahn on his first Annual Meetings in his capacity as the Managing Director of the International Monetary Fund. I acknowledge the work the IMF and the Bank are doing to help restore global macroeconomic and financial stability while bolstering growth and reducing poverty. It is at times of crisis many member countries look to these institutions for guidance and assistance. Since the last Annual Meetings, the global economy continues to slow down markedly and the global economic prospects have split along two contrasting lines. The golden weather of economic growth that major industrialized countries enjoyed for several years has faded. The United States, the Euro zone, and Japan are now experiencing major economic slowdowns because of the deepening financial crisis. 145 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 146 By contrast, the emerging and developing economies are expected to remain resilient with growth slowing slightly to around 7 percent in 2008 and 6 percent in 2009. With forecasters predicting that the slow- down of global economic growth will continue through 2009, Tonga joins other member countries in echoing its concern over the impact of the current financial crisis. In this current situation, Tonga shares the Fund's view for strong and coordinated policies to mitigate the spilling effects of the global crisis on the rest of the world. While addressing the challenges of the global financial turmoil and economic stagnation, it is imperative that other short- and long-term issues also receive attention. Global fuel and food prices have esca- lated sharply causing high inflation in many member countries. These price movements send important economic signals and we encourage continuing efforts by both the Fund and the Bank to soften the effects of these price movements on the most vulnerable member countries. The determination by the Fund and the Bank not to lose sight of the long-term objectives because of today's crisis is a move in the right direction. Given time, financial markets will recover and food and fuel prices will stabilize albeit at higher levels. In that respect, I acknowl- edge the efforts from the Fund and the Bank to restore confidence and reduce the human cost of these adjustment processes. Aid is another area where some coordination is occurring but much more action is needed. Effective aid occurs where needs are properly identified, and donors work together to complement each other in meeting the needs. Tonga notes the increasing coordination of aid activities between the Bank, Fund, and other aid agencies in their oper- ation programs.We support the Fund's proposed reforms to the Exoge- nous Shocks Facility, which will provide more rapid and effective assis- tance to low income countries in the event of shocks. The reforms undertaken by the Fund and the Bank are timely in order to respond more effectively to the global challenges now and in the future. The move to enhance the voice and participation of devel- oping countries will help improve the alignment of aid efforts and national needs.We therefore strongly agree with these initiatives. Domestic Economic Developments Tonga's economy has shown resilience in the face of internal and external shocks. Preliminary projections indicated that economic growth is expected to expand by 2.6 percent in 2008/09 from 1.2 per- cent in 2007/08, with construction, transport, and services providing the impetus. A number of tourism and agriculture initiatives are also in the pipeline. These initiatives allow Tonga to tap its unused economic potential and also bring some much-needed diversity into the Tongan 146 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 147 economy.This will help address the problem of a narrow economic base and reliance on a few key exports that has been a constraint in expand- ing the Tongan economy. This economic growth is underpinned by strong remittances, increasing foreign aid and recovery in private invest- ments. These favorable economic developments have allowed the gov- ernment to maintain a balanced budget for 2008/09 financial year. Furthermore, the government of Tonga continues to pursue its eco- nomic and public sector reforms to stimulate growth and promote pri- vate sector development. Major reforms include moving the taxation system from being heavily based on international trade towards an effi- cient low rate broad based taxation system. Public enterprises are being rationalized to improve financial performance and some are being privatized. Work is also continuing to ease and reduce the cost of doing business with good success. Having said that, I would like to acknowledge the ongoing technical and financial assistance from the Bank, the Fund and their agencies in supporting us in these reforms. Social and political reforms are ongoing and a fully democratic govern- ment is expected to be in place in 2010. Tonga's relative high social development requires higher economic performance in order to achieve the Millennium Development Goals and sustain it at that level going forward. There is confidence that Tonga will be on target in areas such as gender equality, health, and education. Continued collaboration with external agencies in achieving the remaining goals is vital. Notwithstanding the achievements to date, Tonga, like other small island states, is affected by the same economic tides that shift the major players. The economy is facing challenges from global surge in food and fuel prices, posing risks to the external account balance and esca- lating inflation, and vulnerability to climate change and natural disas- ters such as cyclones and earthquakes. These challenges could easily undermine Tonga's economic growth. The current global financial tur- bulence raises the risk of a decline in remittances. The Tongan Government is committed to maintain prudent fiscal and monetary policies to preserve macroeconomic stability and accel- erate economic growth. The Government has given priority to climate change, which needs adaptation and mitigation measures with support from donor communities. Work is currently being done to explore alternative sources of energy, in addition to more efficient utilization of fuel. The financial and technical assistance towards this initiative from the Bank Global Facility for Climate Change will greatly assist. Tonga is doing everything it can to manage these challenges. How- ever, some of these are beyond our control. In this context, Tonga will continue to rely on the Fund, the Bank and other donors to assist the economy in addressing these challenges. 147 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 148 To improve aid effectiveness and coordination, Tonga has signed a joint Declaration of Aid Effectiveness with its development partners. To guide development, the government of Tonga has also produced a Strategic Development Priorities framework. This framework is being reviewed for the next three years commencing July 2009. The Strategic Development Plan and Declaration of Aid Effectiveness are the first steps, however, much remains to be done to effectively align and inte- grate aid within Tonga. This ultimately will bring all donors into the Declaration of Aid Effectiveness. The Government of Tonga is pleased with the decision by the Bank to establish an office in Tonga, which will strengthen our relationship and enable better coordination with other donor partners. The Tongan Government is always grateful to the Fund for the continued coopera- tion on the Article IV Consultations and other technical assistance received. In conclusion, Tonga strongly supports the efforts by the Fund and the Bank to address the challenges before us and their efforts to reform their institutions so they can respond quickly and appropriately to the needs of member countries. I look forward to a continued close working relationship with both institutions. I wish the Bank and the Fund continued success in dealing with existing and emerging chal- lenges going forward. TURKEY: MEHMET SIMSEK Governor of the Fund This year's annual meetings are taking place against a backdrop of dramatic changes in the global financial system. Devastating financial shocks continue to hit global markets. While the epicenter of the finan- cial crisis has been the U.S., the problems quickly spilled over to Europe and elsewhere. Shaken by these financial shocks, the world economy is entering a difficult phase. Emerging and developing economies, which have been the engine of economic growth, are facing economic slowdown mainly through trade and credit channels. While inflationary pressures are likely to ease, the risk of a significant slowdown in capital inflows appear high. To deal with the fallout of the ongoing global crisis, it is clear that a coordinated response is required. We must devise a global fire-fighting strategy as well as ways of dealing with the impact of the crisis. We believe that the Fund is uniquely placed in this respect to coordinate a global response. Hence, we expect the IMF to play a more active role in coordinating the policy response. In this rather gloomy background, I am pleased to tell you that the Turkish economy has so far been quite resilient to the global shock. 148 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 149 Real GDP growth, for instance, was 4.2 percent in the first half of this year. This is lower than an average annual real GDP growth of 6.7 per- cent in the previous six years. For 2008, the growth is expected to settle around 4 percent. In the short-term, growth is likely to slow further. However, we remain positive on medium-long term growth outlook. Turkey's demographics are favorable and we are implementing reforms that would boost productivity. Thanks to softening commodity prices and weakening domestic demand, inflation is likely to fall to 7.5 percent next year. Turkey's current account deficit, which is likely to have reached 6.5 percent of GDP in 2008, looks set to narrow significantly in 2009. The deficit is partially financed by strong FDI inflows with nonbank corporate sector medium-long term borrowing providing a big chunk of financing. While the global backdrop has deteriorated in recent months, Turkey's strong medium-long term growth prospects should continue to help attract the necessary funding. In addition, central bank has about 80 billion US$ reserves. Fiscal discipline remains the cornerstone of our economic program. Thanks to sustained (and sizeable fiscal adjustment) over the past six years, Turkey has lowered the public debt to GDP ratio to around 37 percent. We are committed to maintaining the fiscal discipline and keep the public debt to GDP ratio on a downward path. To enhance the credibility of our medium-term fiscal framework, we are planning to introduce a formal fiscal rule over the next few months. Despite a relatively less favorable domestic and global backdrop, we have continued to implement structural reforms. We have adopted and implemented a number of critical reforms including a landmark social security reform, a labor market reform, and energy market reform. We have also introduced generous incentives to R&D to help Turkey move up the value chain. Finally, Turkey's banking sector is sound and strong. It is well capi- talized, with a capital adequacy ratio of around 17.5 percent as of June 2008. The sector has strong asset quality. Banking sector's net NPL ratio was a mere 0.6 percent as of end 1H08. The sector has been prof- itable with an ROE of 24.7 percent in 2007. The system also has no meaningful currency mismatch. To sum up,Turkey's macroeconomic fundamentals are strong.While this does not make us immune to the on-going global shock, it should make us a lot more resilient. Let me now turn to matters relating to the Fund's and the Bank agenda. We commend the management for timely launching of a review of the Fund lending instruments, access policy and charges and maturities framework. We support removal of the redundant facilities from the 149 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 150 toolkit. There is also a case for making existing instruments more flexi- ble to address different needs of all membership. We closely follow the discussion on creation of a new liquidity instrument and would like to thank for different proposals. We should also substantially increase the access limits for the Fund financing. The Fund's charges and maturity framework also needs to be streamlined, in particular, the application of surcharges. Hence, we strongly expect the upcoming Fund work to address these issues. On the World Bank side, we welcome the consensus reached by the Executive Directors on the Voice Reform. The agreement represents an important step in enhancing the voice and participation of develop- ing and transition countries in the World Bank. This first step, however, should continue with a more ambitious second step, which should include, among others, a meaningful realignment of IBRD sharehold- ing to reflect countries' relative position in the world economy. UNITED STATES: CLAY LOWERY Temporary Alternate Governor of the Fund and the Bank I welcome all of you to Washington. In the last few days, we have witnessed some of the most extraordi- nary events in our careers as finance officials. The strains and stresses in global financial markets have deepened, posing a great challenge to the global economic and financial system. Yet, these very stresses underscore the reality of why we come together annually. Since last Friday, Washington has been the staging ground for meetings of the G-7 and G-20 Finance Ministers, the Inter- national Monetary and Financial Committee and the World Bank Development Committee. The Financial Stability Forum and the IMF hosted a high-level meeting on global financial turmoil. We have all united with determination and with the singular focus of overcoming the world's financial turmoil. We have exchanged views, shared experiences and set out an action plan. We have done so because we know that the problems we face are global, because the world econ- omy and financial markets are more inter-connected than ever before, because we value multilateralism, and because the answer to overcoming challenges is international partnership, cooperation, and collaboration. We must all act decisively, individually and collectively, according to our needs, to secure stability and growth for the world economic and financial order. None of us can afford to go it alone and each of us has our part to play. And we must remember that notwithstanding the temptation to resort to isolationism in the face of the current turmoil, we all benefit from free, open, competitive and soundly regulated financial markets. 150 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 151 The housing correction in the United States and the lack of confi- dence in mortgage assets has undermined investor confidence at here and abroad. It is profoundly affecting American families and businesses. We have tackled this challenge vigorously and head-on. We have acted boldly to provide liquidity to markets. The United States has created a number of innovative funding facilities to main- tain the functioning of inter-bank markets, guarantee money market mutual funds, and we have extended dollar swap lines throughout the world. We have worked vigilantly to strengthen our financial institutions. A number of significant institutional problems were addressed on a case-by-case basis over the last six months. This approach, while neces- sary, was not sufficient. Thus, we adopted a systemic approach on a significant scale, to get at the underlying causes of the turmoil. With our new authority under the Emergency Economic Stability Act, the Treasury is empowered to use up to $700 billion to purchase capital in financial institutions, to purchase or insure mortgage assets, and to purchase any other troubled assets that the Treasury and the Federal Reserve deem necessary to promote financial market stability. We have also taken steps to ensure the integrity of our financial markets and penalize frauds and market manipulation. And we have also protected our retail savers by temporarily increasing deposit insur- ance, and thus buttressing stability. Every step of the way, we have worked in lockstep with the interna- tional community. Last Wednesday many of the world's major central banks cut official interest rates in unison with the Fed. Our colleagues in Europe have nationalized or rescued specific financial institutions to restore confidence. They joined us in combating market abuse and they too have worked to create a more unified deposit insurance system. Let me assure all of you that the United States will remain vigilant and committed to working with our global partners to take further action as needed to restore confidence in our markets. That is why Treasury welcomes the initiatives taken by European nations as part of the G-7 action plan to strengthen their financial sys- tem and address funding issues for their financial institutions. We in the United States are also moving forward on actions under the G-7 Action Plan announced Friday to improve availability of fund- ing for our banks. One area where we will continue our strong work with the interna- tional community is to build a new regulatory framework for the future to limit the chances that yesterday's mistakes will be repeated tomorrow. The President's Working Group on Financial Markets has taken impor- tant steps to improve market transparency and disclosure, risk awareness 151 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 152 and management, capital and regulatory policies, practices regarding the use of credit ratings and market infrastructure for over-the-counter deriv- atives products. Our work has been undertaken in conjunction with the Financial Stability Forum and the IMF from day one. The path ahead of us remains arduous. The current difficulties will not end tomorrow and even as confidence is restored, recovery will be slow. But as a student of financial history, I have little doubt that the vigorous actions we are taking and our partnership--so readily sym- bolized by this gathering--will overcome the challenges we face and we will in time emerge stronger. VIETNAM: NGUYEN VAN GIAU Governor of the Fund First of all, I would like to express our high appreciation to our col- leagues at the Bank and the Fund for their excellent arrangements of this important event. Since the last time we met at the 2007 meetings, the global economy has experienced various complicated developments, albeit several advantages. Increasing food and oil prices, the spillover inflation and the current global financial turmoil have caused the slowdowns in the global economic and financial systems, especially the fledging financial systems of the developing and transitional economies. Higher prices, particularly oil and food prices, have globally chal- lenged the food and energy security. The U.S. crisis-led financial tur- moil has brought about numerous global macroeconomic problems, higher inflation, demand imbalance, and a gloomy forecast of the global economic growth from 4.9 percent to 3.7 percent. Major economies, such as the U.S., Japan, and the E.U., have reset their eco- nomic growth goals. In the region, high and sustainable growth economies, including China and ASEAN economies might have growth respectively decreasing from 11.4 percent and 6.5 percent in 2007 to 10 percent and 5.7 percent in 2008. The global economic tur- moil has caused countries, including Vietnam, to adjust their macroeco- nomic policies as well as financial and monetary policies in an effort to contain inflation pressure, and higher food and oil prices. The current situation is setting new challenges for international institutions, including the Fund and the Bank to take bold actions in an effort to support their member countries, thereby, contributing to the continuation of economic stability and driving forces, and ensuring poverty reduction achievements. In this connection, Vietnam welcomes efforts made by the Fund and the Bank in safeguarding global financial stability, promoting sustainable growth and reducing poverty. 152 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 153 It is encouraging that the Fund has recently made substantial efforts in its governance, operational and financial reform.We welcome the Fund's success in the first step of strengthening member represen- tation through quotas and voice enhancement. Policy dialogue between the IMF and its member countries is now more candid, and overall more effective, when better focused on how members' economic poli- cies impact the stability of their economies and of the economies of their partners. Lending activities are also reformed in order to provide assistance faster, in larger amounts, to low-income countries, streamline policy commitments made by borrower governments and also help address commodity price changes, disasters and conflicts. We also highly appreciate significant benefits that IMF technical assistance brings to member countries, with a unique feature of strong surveil- lance-lending-technical assistance relationship. Those reform activities are much supported by the IMF's directions of diversifying revenue sources together with strengthening the effectiveness in resources allo- cation and utilization. However, regarding the issue of cost sharing in TA provision, we would like to note that the priority should be given toward developing countries, facilitating them to maintain their access and utilization of the Fund's assistance. At the same time, we saw that soaring food and commodity prices over the past year reaffirmed the role the Bank plays in international economic development and poverty reduction worldwide. We highly appreciate the Bank's ability in tackling the global crises and supporting sustainable growth with care for the environment in its client countries while safeguarding and improving people's health, education, and other human development outcomes.We also highly appreciate the collabora- tion and partnership the Bank had with numerous other multilateral organizations and partners to realize the most far-reaching results possi- ble. The Bank's quick response in May 2008 with a rapid financing facil- ity1 for food crisis is widely acknowledged by all as an immediate action addressing immediate needs. In the longer run, the Bank's recommen- dations on the focus of increasing agricultural productivity and narrow- ing the gap between the urban and rural areas will significantly con- tribute to the agricultural and rural development of the member countries, thus ensuring the sustainable economic development. On the financial side, the borrowing member countries highly appreciate the great efforts made by the Board of Executive Directors to bring down the commitment fee on the outstanding credits of the 1The World Bank report shows the first grants under the facility were approved for Djibouti ($5 million), Haiti ($10 million), and Liberia ($10 million). 153 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 154 IDA to zero percent. This decision helps the borrowers to reduce cost of resource significantly, hence increasing their capacity to invest for economic growth and poverty reduction. We also thank the IBRD for its biggest simplification and reduction in its loan pricing since the Asia financial crisis. It now makes borrowers to have access to IBRD loans at longer maturities and at price that are lower and more transparent than they had been. On the nonfinancial side, we endorse the Bank's efforts in introduc- ing simple projects that can be easily replicated, mechanism for addi- tional financing of successful projects and revision to emergency and rapid response lending policy. We also endorse the approval of the Board in April 2008 for piloting the use of country system for financial management and safeguards as it helps harmonize the procedures of both the Bank and the borrowing member countries. However, much needs to be done without delay to alleviate global crises. An estimated 2.5 billion people are trying to survive on $2 or less a day. Therefore, in the coming time the role of the IMF and the WB will be more significant in assisting their member countries to accomplish the cause of economic development and poverty reduction. In addressing the adverse impact of the current global turmoil on the macroeconomy of the country, we welcome the coming focus of the IMF's activities on key issues of global economic and financial concern and its actions to help members to meet the potential global chal- lenges. It would be good for all members that IMF will be making sub- stantial progress in the coming time to enable member countries deal with imminent crises and urgent tasks, including responding to the challenges posed by rising food and fuel prices, drawing lessons from financial market crises and advancing key surveillance issues. Regard- ing this, we totally support the call made by IMF Managing Director Dominique Strauss-Kahn for a global solution to the financial crisis, in which the Fund would play the coordination role to organize a global response to weaknesses in the global financial system. Another IMF priority is to review its lending instruments. We agree that it is time for the Fund to revise some credit facilities so that it can provide a more accessible and appropriate source of capital for those countries in need. New organizational tools and working practices, especially enhancement of IMF consultations and local capacity build- ing program are much welcomed. We also look forward to further advances of the Fund's governance agenda, including the next step beyond strengthening membership representation through quotas and voice improvements. We share the vision of the Bank, which is "to contribute to an inclu- sive and sustainable globalization--to overcome poverty, enhance growth with care for the environment, and create individual opportu- 154 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 155 nity and hope." This vision reaffirms the commitment of the Bank to fight against poverty and ensure the equal and sustainable develop- ment. In this connection, we think that the Bank should continue to collaborate closely with its member countries and international part- ners to make further progress in addressing the above-mention chal- lenges. Particularly, we strongly support the Bank's policy to consider Africa, especially sub-Saharan Africa, where extreme poverty is expected to grow, as its priority for action. We also urge the Bank to continue to intensify its role in coordinating the necessary available resources both technical and financial ones to support and assist the other countries in all regions to confront their emerging vulnerabilities, including Vietnam. Skyrocketing food prices are a harsh reality, resulting in even greater hunger and malnutrition worldwide. Climate change threatens agricultural productivity and consequently the world's food supply as well as the income of most of the poorest people. Natural catastrophes, such as this year's earthquake in China and cyclone in Myanmar, dev- astate millions who may not survive without immediate disaster relief. Communicable diseases, with HIV/AIDS and malaria being the most critical, continue to challenge us. Therefore, we commend the Bank to continue to push forward the Global Food Crisis Response Program in collaboration with the United Nation and other partners. We also encourage the Bank to advance work on all aspects of voice and partic- ipation, keeping in mind the distinct nature of the Bank's development mandate, and the importance of enhancing voice and participation for all developing and transition countries in the World Bank Group. As the change in the climate spans multisectors and development issues, all the countries are at significant risk. Therefore, we urge the Bank to continue to scale up its actions like adopting a Strategic Framework for Climate Change, setting up specialized climate funds, in order to help member countries to adapt to climate change and mitigate its impacts as well as to turn the challenge of climate change into an opportunity for development leading to an inclusive and sustainable globalization. Now let me take this chance to provide a briefing of the latest developments in my country since our last gathering. Over the past year, we have achieved the following significant achievements: 2007 was the year we effectively joined WTO, and since then the macroeconomic situation has been severely impacted by complex volatilities of the world economy: inflation bounced back to 2 digit numbers (12.63 percent in 2007 and 21.87 percent for the first 9 months of 2008 compared with the end of 2007); trade deficit increased sharply to 29.1 percent of the total exports in 2007 and 32.6 percent of the total exports in the first 9 months of 2008. Given rapidly increasing inflation and trade deficit exercise being threats to macroeconomic stability, the 155 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 156 government considered inflation control as the first priority objective and focused on directing the implementation of 8 major comprehensive sets of policies, including: (i) tightening monetary policy and ensuring the liquidity for banking system and the whole economy; (ii) closely monitoring and enhancing efficiency of public spending; (iii) focusing on production development and ensuring balance of good supply and demand; (iv) promoting exports, strictly supervising imports to reduce trade deficit; (v) strictly practicing thrift in production and consump- tion; (vi) enhancing market management work to guard against specula- tion, smuggling and trade fraud; (vii) strengthening policies to stabilize people's life and expanding the coverage of implementation of social security policy; and (viii) promoting information and propagandization. With the implementation of the government's policies, including monetary policy, macroeconomic developments have shown positive signals: ˇ GDP for the first 9 months reached 6.52 percent, still at a high level compared with many other countries. ˇ Inflation was reduced from a monthly average of 2.9 percent for the first 6 months to less than 1 percent for July,August, and September. ˇ The trade deficit narrowed from a monthly average of US$2.3 billion in the first 6 months to the level of less than US$1.0 billion/month in July,August, and September. ˇ Newly granted and added foreign direct investment in the first 9 months reached US$57.1 billion, up by 398.5 percent from the same period of 2007. ˇ The money market and foreign exchange market are stable, and credit and total liquidity have a slower trend, ensuring the settlement safety for the credit institution system. The Vietnamese economy still maintains the potential of stable devel- opment in medium and long term. However, from now to the end of 2008, the world and domestic economies may have many complex develop- ments, especially the effects of the US financial turmoil; therefore, the government continues to implement tight monetary and fiscal policy but in a flexible way in order to help control inflation, stabilize macroeco- nomic situation, ensure social security and sustainable development. In addition to our own efforts, the support from WB and IMF is always appreciated by the government of Vietnam. Particularly, the financial support of the WB has contributed significantly to building up the key fundamentals for economic development of Vietnam. 156 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 157 Over the past 15 years, WB has provided financial assistance of more than US$8 billion for around 80 programs and projects in various areas. In fiscal year 2009, WB has committed more than US$1.8 bil- lion for 15 programs and projects, of which there will be an IBRD- financed project. Such financing program would make the Bank become one of the biggest ODA providers for Vietnam. In concluding, I would like to convey our sincere thanks to the man- agement and staff of the Fund and the Bank for efficient support extended to Vietnam thus far. I wish the Meetings a splendid success. 157 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 158 CONCLUDING REMARKS BY THE CHAIRMAN THE HONORABLE ZORAN STAVRESKI As the 2008 Annual Meetings of a rather unprecedented year draw to a close, I want to review the major issues that we have discussed and their implications for the Fund's and Bank's work priorities for the coming year. First, these Annual Meetings will be remembered for taking place in the midst of a major financial market crisis. In this regard, we started to take stock of the lessons that are emerging. We noted that, while national authorities in individual countries need to play their part in mitigating the effects of the crisis, the Fund remains well placed-- including in collaboration with the FSF--to help prevent and resolve international financial crises and disseminate best practices. Particu- larly invaluable are the Fund's near universal membership, and its mul- tilateral perspective, focusing on cross-country spillovers and the inter- linkages between the macro and the financial sectors. We also acknowledged the sound capitalization and prudent risk management policies that have kept the Bank strong, providing it the capacity to expand finance in response to client demand. Second, surging energy and commodity prices have not only exacer- bated the impact of the financial market turmoil, but have also imposed a high cost on countries' balance sheets and threatened their advances in poverty reduction. We welcomed the Bank's launch of the New Deal on Global Food Policy as well as the establishment of the Global Food Crisis Response Program and its continued engagement, together with the Fund, in providing member countries with additional financial support and policy advice. We also called on the donor com- munity to play its part in keeping its commitments to increase aid to the most vulnerable people. Third, particularly at this critical juncture, Governors called on the Fund and the Bank to seize the opportunities for progress and change so as to remain relevant to their membership.We applauded the Fund's reform of quota and voice. We also welcomed the Bank's discussions on concrete options on voice and participation and urged the World Bank to reach a consensus on a comprehensive package of reforms. We nonetheless reaffirmed the importance of continuing to review the issue of governance more broadly at both the Bank and the Fund, and supported the three-pronged approach that the Fund's Managing Directors has proposed in this respect. Finally, we discussed other ongoing core challenges, and agreed that addressing climate change is crucial to the development and poverty reduction agenda, given its potential to reverse the progress made by 158 6135-CH03_p092-159.pdf 4/1/09 12:12 PM Page 159 developing countries toward achieving the Millennium Development Goals. In this context, we also agreed on the importance of scaling up aid, improving its effectiveness, and ensuring its delivery against the background of a more complex aid architecture. My fellow Governors, it has been a privilege to serve as Chairman of the Board of Governors of this year's Annual Meetings. I thank you all for your support and cooperation, which have resulted in fruitful meetings. Allow me to reiterate my deep appreciation to Mr. Strauss- Kahn and Mr. Zoellick for their effective leadership at this difficult time. I also reiterate my full trust in the staff of the Bretton Wood Insti- tutions for their expertise, dedication, and continued hard work. I would also like to thank Mr. Anjaria and Ms. Georgieva and the staff of the Joint Secretariat, particularly the Assistant Secretary for Conferences, Ms. Yeo, for successfully arranging the meetings, as well as the authorities of the United States for their hospitality and assistance. Finally, let me congratulate His Excellency Minister Nguyen Van Giau of Vietnam, who will succeed me as the Chairman of the 2009 Annual Meetings. I wish everyone safe travels home, and I look for- ward to meeting you again next year in Istanbul. 159 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 160 VIETNAM: NGUYEN VAN GIAU Governor of the Fund It is a great honor for Vietnam to accept the chairmanship of the Board of Governors for 2009. Fellow Governors, please join me in thanking His Excellency Zoran Stavreski for the exceptional manner in which he has conducted these meetings. These meetings have taken place against the backdrop of one of the most serious financial crises of our time. The complexity and scale of the challenges involved have reminded us that the strengthened coop- eration of the Bretton Wood Institutions is crucial in confronting the present financial crisis and the surge in food and fuel prices. At the same time, we have also been reminded of the need for these institu- tions to devise timely and flexible responses to ensure member coun- tries' resilience to external shocks and to help safeguard the poorest from the full impact of the current crises. Our discussions have recognized the importance of Fund surveil- lance in providing sound analysis at national and regional levels and in devoting greater attention to cross-country spillovers and macro- financial linkages. We have been further encouraged by the Fund's commitment to consider new instruments that will allow for quick and efficient responses to its members' request for assistance. Similarly, we have welcomed the active role of the Bank, in particular in providing policy advice and financing to the countries that are being hit the most by rising food and fuel prices, while also standing ready to expand lending in response to the on-going financial turbulence. At the same time, we have reaffirmed the need for the Fund and the Bank to remain focused on crucial ongoing core challenges, such as increasing the role of developing and dynamic economies in the gover- nance of our institutions. We have thus commended the Fund's quota and voice reform and the Bank's continuing discussions in this respect. In addition, we have supported the Bank's efforts to integrate climate change into development strategies, and the scaling-up of aid to low- income countries, together with improved aid effectiveness. Allow me to convey our appreciation to the staffs of the Interna- tional Monetary Fund and the World Bank for their continued hard work and dedication. Please also let me express our gratitude and deep appreciation to our hosts: the people and authorities of the United States and Washington, DC. I look forward to working with all of you to tackle the important issues we have outlined here, and to seeing you at our Annual Meet- ings next year in Turkey. 160 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 161 DOCUMENTS OF THE BOARD OF GOVERNORS SCHEDULE OF MEETINGS1,2 Sunday October 12 4:45 . . Joint Procedures Committee P M 4:55 . . MIGA Procedures Committee P M Monday October 13 9:30 . . Opening Ceremonies A M Address from the Chair Annual Address by Managing Director, International Monetary Fund Annual Address by President, World Bank Group3 Annual Discussion 2:30 . . Annual Discussion (continued) P M Following the conclusion Procedures Committees of the Annual Discussion Reports Chairman, ICSID Administrative Council Comments by Heads of Organizations Adjournment 1 The Meetings were held at DAR Constitution Hall (Monday a.m. session) and Fund Headquarters 2 Conference Hall (Monday p.m. session) and all sessions were joint. 2 The International Monetary and Financial Committee met on Saturday, October 11, 2008 at 10:30 a.m. in IMF HQ2 Conference Hall. The Development Committee met on Sunday, October 12, 2008 at 9:30 a.m. in the Preston Auditorium, World Bank HQ. 3 The World Bank Group consists of the following: International Bank for Reconstruction and Development (IBRD) International Finance Corporation (IFC) Iternational Development Association (IDA) International Centre for Settlement of Investment Disputes (ICSID) Multilateral Investment Guarantee Agency (MIGA) 161 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 162 PROVISIONS RELATING TO THE CONDUCT OF THE MEETINGS1 ADMISSION 1. Session of the Boards of Governors of the International Monetary Fund and the World Bank Group will be joint and shall open to accredited press, guests and staff. 2. Meetings of the Joint Procedures Committee shall be open only to Governors 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 generally 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 pro- ceedings 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 Chair- man, the Managing Director 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 Committee 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 con- cerning the proceedings of the Annual Meetings as they may deem suitable. 1 Approved on March 21, 2008 pursuant to the By-laws, IBRD Section 5(d), IFC Section 4(d), and IDA Section 1(a). 162 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 163 AGENDA Bank1 Annual Report Financial Statements and Annual Audit Allocation of FY08 Net Income Administrative Budget for FY09 Annual Report of the Development Committee 2008 Regular Election of Executive Directors Selection of the Members of the Joint Procedures Committee and its Officers for 2008-2009 IFC1 Annual Report Financial Statements and Annual Audit Use of IFC's FY08 Net Income: Retained Earnings and Designated Retained Earnings Administrative Budget for FY09 IDA1 Annual Report Financial Statements and Annual Audit Administrative Budget for FY09 MIGA2 Annual Report Financial Statements and Annual Audit 2008 Regular Election of Directors Selection of the Members of the MIGA Procedures Committee and its Officers for 2008-2009 1 Approved on August 19, 2008 pursuant to the By-laws, IBRD Section 5 (d), IFC Section 4(d), and IDA Section 1(a). 2 Approved on August 19, 2008, pursuant to Section 4(a) of the MIGA By-laws. 163 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 164 JOINT PROCEDURES COMMITTEE Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . Macedonia, Former Yugoslav Republic of Vice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . Costa Rica Namibia Reporting Member . . . . . . . . . . . . . . . . . . . . Qatar MEMBERS Argentina Namibia Bangladesh Qatar Brazil Russian Federation Costa Rica Saudi Arabia France Switzerland Germany Togo Greece Turkey Grenada Uganda Guinea-Bissau United Kingdom Japan United States Korea Vietnam Macedonia, Former Yugoslav Republic of 164 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 165 REPORT OF THE JOINT PROCEDURES COMMITTEE REPORT II1 October 12, 2008 At the meeting of the Joint Procedures Committee held on October 12, 2008, 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. 2008 Annual Report The Committee noted that the 2008 Annual Report and the activities of the Bank and IDA would be discussed at these Annual Meetings. 2. 2008 Regular Election of Executive Directors The Committee noted that the 2008 Regular Election of Executive Directors of the Bank would be completed on October 13, 2008, and that the next Regular Election of Executive Directors will take place in 2010. 3. Financial Statements,Accountants' Report, and Administrative Budgets The Committee considered the Financial Statements, Accountants' Reports, and Administrative Budgets contained in the 2008 Bank and IDA Annual Report, together with the Report dated June 26, 2008. The Committee recommends that the Boards of Governors of the Bank and IDA adopt the draft Resolutions. . . .2 4. Allocation of FY08 Net Income The Committee considered the Report of the Executive Directors, dated August 7, 2008, on the Allocation of FY08 Net Income. . . .3 The Committee recommends that the Board of Governors of the Bank adopt the draft Resolution. . . .4 1 Report I related to business of the Fund. 2 See page 174. 3 See page 224. 4 See page 174. 165 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 166 The Committee submits the following report and recommendations on IFC business: 5. 2008 Annual Report The Committee noted that the 2008 Annual Report and the activi- ties of the IFC would be discussed at these Annual Meetings. 6. Financial Statements,Accountant's Report,Administrative Budget and Designations of Retained Earnings The Committee considered the Financial Statements and Accoun- tant's Report, the Administrative Budget, and the Designations of Retained Earnings based on IFC's FY08 Net Income contained in the 2008 Annual Report, dated June 26, 2008. The Committee recommends that the Board of Governors of IFC adopt the draft Resolution. . . .1 Approved: ___________________________ /s/ Zoran Stavreski ___________________________ /s/ A. Shakour Shaalan Macedonia, Former Yugoslav Qatar--Reporting Member Republic of--Chairman (This report was approved and its recommendations were adopted by the Board of Governors on October 12, 2008) 1 See page 177. 166 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 167 REPORT III October 12, 2008 The Joint Procedures Committee met on October 12, 2008, 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 (Development Committee) would be presented to the Boards of Gov- ernors of the Fund and Bank on October 13, 2008, pursuant to para- graph 5 of Resolutions Nos. 29-9 and 294 of the Fund and Bank, respectively. . . .1 The Committee recommends that the Boards of Governors of the Fund and the Bank note the report and thank the Development Com- mittee for its work. 2. Officers and Joint Procedures Committee for 2008/09 The Committee recommends that the Governor for Vietnam be Chairman and that the Governors for Lithuania and Tunisia 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 correspondence and, if the occa- sion requires, by convening; and that this Committee shall consist of the Governors for the following members: The Bahamas, China, Côte d'Ivoire, the Czech Republic, Djibouti, France, Germany, Haiti, India, Iraq, Japan, Liberia, Lithuania, Montenegro, New Zealand, Nigeria, Saudi Arabia, Spain, Tunisia, the United Kingdom, the United States, Uzbekistan, and Vietnam. It is recommended that the Chairman of the Joint Procedures Com- mittee shall be the Governor for Vietnam, and the Vice Chairmen shall be the Governors for Lithuania and Tunisia, and that the Governor for Liberia shall serve as Reporting Member. 1 See page 18. 167 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 168 Approved: ___________________________ /s/ Zoran Stavreski ___________________________ /s/ A. Shakour Shaalan Macedonia, Former Yugoslav Qatar--Reporting Member Republic of--Chairman (This report was approved and its recommendations were adopted by the Board of Governors on October 12, 2008) 168 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 169 MIGA PROCEDURES COMMITTEE Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . Macedonia, Former Yugoslav Republic of Vice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . Costa Rica Namibia Reporting Member . . . . . . . . . . . . . . . . . . . . Qatar MEMBERS Argentina Namibia Bangladesh Qatar Brazil Russia Federation Costa Rica Saudi Arabia France Switzerland Germany Togo Greece Turkey Grenada Uganda Guinea-Bissau United Kingdom Japan United States Korea Vietnam Macedonia, Former Yugoslav Republic of 169 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 170 REPORT OF THE MIGA PROCEDURES COMMITTEE REPORT I October 12, 2008 At the meeting of the MIGA Procedures Committee held on Octo- ber 12, 2008, the items of business on the agenda of the Council of Governors of MIGA were considered. The Committee submits the following report and recommendations on MIGA business: 1. 2008 Annual Report The Committee noted that provision had been made for discussion of the 2008 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 2008 Annual Report. The Committee recommends that the Council of Governors adopt the draft Resolution. . . .1 3. 2008 Regular Election of Directors The Committee noted that the 2008 Regular Election of Directors of MIGA would be completed on October 13, 2008, and that the next Regular Election of Directors will take place in 2010. 4. Officers and Procedures Committee for 2008/09 The Committee recommends that the Governor for Vietnam be Chairman and the Governors for Lithuania and Tunisia be Vice Chair- men 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 1 See page 198. 170 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 171 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: The Bahamas, China, Côte d'Ivoire, the Czech Republic, Djibouti, France, Germany, Haiti, India, Iraq, Japan, Liberia, Lithuania, Montenegro, New Zealand, Nigeria, Saudi Arabia, Spain, Tunisia, the United Kingdom, the United States, and Uzbekistan and Vietnam. It is recommended that the Chairman of the Procedures Committee shall be the Governor for Vietnam and the Vice Chairmen shall be the Governors for Lithuania and Tunisia, and that the Governor for Liberia shall serve as Reporting Member. Approved: ___________________________ /s/ Zoran Stavreski ___________________________ /s/ A. Shakour Shaalan Macedonia, Former Yugoslav Qatar--Reporting Member Republic of--Chairman (This report was approved and its recommendations were adopted by the Council of Governors on October 12, 2008) 171 6135-CH04_p160-198.pdf 4/2/09 2:49 PM Page 172 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS OF THE BANK BETWEEN THE 2007 AND 2008 ANNUAL MEETINGS Resolution No. 589 Transfer from Surplus to Replenish the Trust Fund for Gaza and West Bank RESOLVED: THAT the Bank transfer from surplus, by way of grant, US$55,000,000 to the Trust Fund for Gaza and West Bank, such trans- fer 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 Asso- ciation into an equivalent amount in other currencies. (Adopted June 4, 2008) Resolution No. 590 Transfer of IBRD Surplus to Food Price Crisis Response Trust Fund RESOLVED: THAT The International Bank for Reconstruction and Develop- ment immediately transfer from surplus, by way of grant, $85 million to the Food Price Crisis Response Trust Fund (the "Trust Fund"), estab- lished by the International Development Association (IDA or the "Association"), administered by the Association in accordance with the resolution establishing the Trust Fund. (Adopted June 13, 2008) Resolution No. 591 Direct Remuneration of Executive Directors and Their Alternates RESOLVED: THAT, effective July 1, 2008, the remuneration of the Executive Directors of the Bank and their Alternates pursuant to Section 13(e) of the By-Laws shall be paid in the form of salary without a separate sup- 172 6135-CH04_p160-198.pdf 4/2/09 2:49 PM Page 173 plemental allowance, and such salary shall be paid at the annual rate of $230,790 per year for Executive Directors and $199,650 per year for their Alternates. (Adopted July 25, 2008) Resolution No. 592 2008 Regular Election of Executive Directors RESOLVED: (a) THAT the attached Rules for the 2008 Regular Election of Execu- tive Directors are hereby approved; and (b) THAT a Regular Election of Executive Directors shall take place in connection with the Annual Meeting of the Board of Governors in 2010. (Adopted August 1, 2008) Resolution No. 593 Allocation of $115 Million of FY08 Net Income RESOLVED: 1. THAT the Report of the Executive Directors dated August 7, 2008, on "Allocation of $115 million of FY08 Net Income" is hereby noted with approval; 2. THAT the addition to the General Reserve of the IBRD of $811 mil- lion, plus or minus any rounding amount less than $1 million, and the addition to the pension reserve of $117 million for the reasons given in the Report of the Executive Directors, are hereby noted with approval; 3. THAT the IBRD retain $115 million as surplus; and 4. THAT the IBRD transfer from surplus, by way of grant, $115 mil- lion to the Food Price Crisis Response Trust Fund. (Adopted September 9, 2008) 173 6135-CH04_p160-198.pdf 4/2/09 2:49 PM Page 174 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS OF THE BANK AT THE 2008 ANNUAL MEETINGS Resolution No. 594 Financial Statements,Accountants' Report, and Administrative Budget RESOLVED: THAT the Board of Governors of the Bank consider the Financial State- ments, Accountants' Report, and Administrative Budget, included in the 2008 Annual Report, as fulfilling the requirements of Article V, Section 13, of theArticles ofAgreement and of Section 18 of the By-Laws of the Bank. (Adopted October 13, 2008) Resolution No. 595 Allocation of FY08 Net Income RESOLVED: 1. THAT the Report of the Executive Directors dated August 7, 2008, on "Allocation of FY08 Net Income" is hereby noted with approval; 2. THAT the addition to the General Reserve of the IBRD of $811 mil- lion, plus or minus any rounding amount less than $1 million, and the addition to the pension reserve of $117 million for the reasons given in the Report of the Executive Directors,are hereby noted with approval; 3. THAT the IBRD transfer to the International Development Asso- ciation, by way of a grant out of the FY08 allocable net income of the IBRD, $583.3 million, which amount may be used by the Asso- ciation to provide financing in the form of grants in addition to loans, such transfer to be drawn down by the Association immedi- ately upon approval by the Board of Governors of the IBRD; 4. THAT the IBRD retain $635 million as surplus; and 5. THAT the IBRD transfer from surplus, by way of grant, $40 million to the Kosovo Sustainable Employment Development Trust Fund. (Adopted October 13, 2008) 174 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 175 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IFC BETWEEN THE 2007 AND 2008 ANNUAL MEETINGS Resolution No. 247 Membership of the State of Qatar WHEREAS, the State of Qatar has applied for admission to mem- bership in the International Finance Corporation in accordance with Section 1(b) of Article II of the Articles of Agreement of the Corpora- tion; and WHEREAS, pursuant to Section 17 of the By-Laws of the Corpora- tion, the Board of Directors, after consultation with representatives of the State of Qatar, has made recommendations to the Board of Gover- nors regarding this application; NOW,THEREFORE, the Board of Governors hereby RESOLVES: THAT the terms and conditions upon which the State of Qatar shall be admitted to membership in the Corporation shall be as follows: 1. Definitions:As used in this Resolution: (a) "Corporation" means International Finance Corporation. (b) "Articles" means the Articles of Agreement of the Corpora tion. (c) "Dollars" or "$" means dollars in currency of the United States of America. 2. Subscription: By accepting membership in the Corporation, the State of Qatar shall subscribe to 1,650 shares of the capital stock of the Corporation at the par value of $1,000 per share. 3. Payment of Subscription: Before accepting membership in the Corporation, the State of Qatar shall pay $1,650,000 to the Cor- poration representing payment in full for the 1,650 shares of the capital stock subscribed. 175 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 176 4. Information: Before accepting membership in the Corporation, the State of Qatar shall furnish to the Corporation such information relating to its application for membership as the Corporation may request. 5. Effective Date of Membership: The State of Qatar shall become a member of the Corporation with a subscription as set forth in para- graph 2 of this Resolution as of the date when the State of Qatar shall have complied with the following requirements: (a) made the payment called for by paragraph 3 of this Resolution; (b) furnished such information as may have been requested by the Corporation pursuant to paragraph 4 of this Resolution; (c) deposited with the International Bank for Reconstruction and Development an instrument stating that it has accepted with- out reservation in accordance with its law the Articles and all the terms and conditions prescribed in this Resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this Resolution; and (d) signed the original Articles held by the International Bank for Reconstruction and Development. 6. Limitation on Period for Fulfillment of Requirements of Member- ship: The State of Qatar may fulfill the requirements for member- ship in the Corporation pursuant to this Resolution until Decem- ber 31, 2008, or such later date as the Board of Directors may determine. (Adopted June 13, 2008) 176 6135-CH04_p160-198.pdf 4/2/09 2:49 PM Page 177 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IFC AT THE 2008 ANNUAL MEETINGS Resolution No. 248 Financial Statements, Accountants' Report, Administrative Budget, and Designations of Retained Earnings RESOLVED: 1. THAT the Board of Governors of the Corporation consider the Consolidated Financial Statements and Independent Auditors' Report included in the 2008 Annual Report and the Administra- tive Budget contained in the Report of the Board of Governors on IFC's FY09­11 Business Plan and Budget (the "Report"), as fulfill- ing the requirements of Article IV, Section 11, of the Articles of Agreement and of Section 16 of the By-Laws of the Corporation; 2. THAT the Report is hereby noted with approval; 3. THAT the Corporation's FY08 net income of $1,547 million be transferred to undesignated retained earnings; 4. THAT the designation of $100 million of retained earnings in IFC's Fiscal Year 2009 First Quarter financial statements for IFC's Fund- ing Mechanism for Technical Assistance and Advisory Services is hereby noted with approval; 5. THAT the designation of $450 million of retained earnings in IFC's Fiscal Year 2009 financial statements for grants to the Inter- national Development Association for use by the Association in the form of grants in furtherance of IFC's purpose, which, as set forth in Article I of the Corporation's Articles of Agreement, is "to further economic development by encouraging the growth of productive private enterprise in the Corporation's member coun- tries, particularly in the less developed areas, thus supplementing the activities of the International Bank for Reconstruction and Development," is hereby noted with approval. (Adopted October 13, 2008) 177 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 178 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS OF IDA BETWEEN THE 2007 AND 2008 ANNUAL MEETINGS Resolution No. 217 Latvia--Change in Membership Status WHEREAS Latvia became a member of the Association on August 11, 1992, pursuant to the terms and conditions of Board of Governors' Resolution No. 163 entitled "Membership of Latvia" adopted on April 24, 1992; WHEREAS Latvia has removed all restrictions on the use by the Association of the amounts of its initial subscription in the Associa- tion's lending activities; WHEREAS Latvia has participated in each of the replenishments of the Association's resources by making subscriptions amounting in the aggregate to $0.89 million; WHEREAS Latvia 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 Gover- nors that the voting rights attached to Latvia's subscriptions and con- tributions to the Association be adjusted on the basis of its status as Part I member; NOW,THEREFORE, the Board of Governors hereby RESOLVES 1. The terms and conditions of the membership of Latvia in the Asso- ciation other than those specifically provided for in this Resolution shall be those set forth in the Articles with respect to the member- ship 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, payments on subscription, usability of cur- rencies, and voting rights). 178 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 179 2. Latvia's votes shall be adjusted as follows: As of the date of this Resolution, 39,757 votes shall be allocated to Latvia in lieu of the votes allocated to it before the said date, on account of its cumula- tive subscriptions to the resources of the Association through the Multilateral Debt Relief Initiative (MDRI) Replenishment (Board of Governors' Resolution No. 211 adopted on April 21, 2006) of the Association's resources, consisting of 57 subscription votes and 39,700 membership votes. (Adopted on January 22, 2008) Resolution No. 218 Membership of the Republic of Lithuania WHEREAS the Republic of Lithuania has applied for membership in the International Development Association in accordance with Sec- tion 1(b) of Article II of the Articles of Agreement of the Association; WHEREAS the Republic of Lithuania has indicated that it will make a subscription and contribution to the Association as part of the upcoming Fifteenth Replenishment of the Association. WHEREAS, pursuant to Section 9 of the By-Laws of the Associa- tion, the Executive Directors, after consultation with representatives of the Republic of Lithuania, have made recommendations to the Board of Governors regarding this application; NOW,THEREFORE, the Board of Governors hereby RESOLVES: THAT the terms and conditions upon which the Republic of Lithuania shall be admitted to membership in the Association shall be as follows: 1. Definition:As used in this Resolution: (a) "Association" means International Development Association. (b) "Articles" means the Articles of Agreement of the Association. (c) "Dollars" or "$" means dollars in currency of the United States of America. 179 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 180 2. Initial Subscription: (a) The terms and conditions of the membership of the Republic of Lithuania in the Association 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, payments on subscription, usability of currencies and voting rights). (b) Upon accepting membership in the Association, the Republic of Lithuania shall subscribe funds in the amount of $1,350,000 expressed in terms of United States Dollars of the weight and fineness in effect on January 1, 1960, that is to say, pursuant to the decision of the Executive Directors of the Association of June 30, 1986, on the valuation of initial subscriptions, $1,628,573 in current Dollars, and shall pay the latter amount to the Association in US Dollars or in any other freely convert- ible currency. As of the date the Republic of Lithuania will become a member of the Association, 604 votes shall be allo- cated to the Republic of Lithuania in respect of such subscrip- tion, consisting of 104 subscription votes and 500 membership votes. 3. Effective Date of Membership: The Republic of Lithuania shall become a member of the Association with a subscription as set forth in paragraph 2(b) of this Resolution as of the date when the Republic of Lithuania shall have complied with the following requirements: (a) made the payments called for by paragraph 2 of this Resolution; (b) deposited with the International Bank for Reconstruction and Development an instrument stating that it has accepted in accordance with its laws the Articles and all the terms and con- ditions prescribed in this Resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this Resolution; and (c) signed the original Articles held in the archives of the Interna- tional Bank for Reconstruction and Development. 4. Limitation on Period for Fulfillment of Requirements of Member- ship: The Republic of Lithuania may fulfill the requirements for membership in the Association pursuant to this Resolution until December 31, 2008, or such later date as the Executive Directors of the Association may determine. 180 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 181 5. Additional Subscriptions and/or Contributions: Upon or after acceptance of membership, the Republic of Lithuania shall also be authorized to make the following additional subscriptions and/or contributions: (a) An additional subscription in the amount of $384,809, compris- ing subscriptions corresponding to the Third through Four- teenth Replenishments which shall carry 32,525 votes, calcu- lated on the basis of 25 subscription votes and 32,500 membership votes, and, (b) An additional subscription in the amount of $48,975 represent- ing subscriptions to replenishment of the Association's resources for financing the Multilateral Debt Relief Initiative (MDRI), which shall be subject to the terms and conditions set out in Resolution No. 211 of the Board of Governors of the Association entitled "Additions to IDA Resources: Financing the Multilateral Debt Relief Initiative (the "MDRI Resolu- tion"), which shall carry 5,803 votes, calculated on the basis of 3 subscription votes and 5,800 membership votes, and which shall be subject to the following terms and conditions: (i) Payment of such additional subscriptions shall be made in a freely convertible currency within 30 days after the Republic of Lithuania notifies the Association of its inten- tion to make such additional subscription for the Third through the Fourteenth Replenishments and, for the MDRI, set out in the MDRI Resolution. (ii) The rights and obligations of the Association and the Republic of Lithuania with regard to such additional sub- scriptions shall be the same (except as otherwise provided in this Resolution) as those which govern the 90% portion of the initial subscriptions of original members payable under Article II, Section 2(d) of the Articles by members listed in Part I of Schedule A of the Articles, provided, however, that the provisions of Article IV, Section 2 of the Articles shall not be applicable to such subscriptions. (c) A subscription and contribution to the Fifteenth Replenish- ment in the amount of Euros 2,230,000, which shall be subject to the terms and conditions set out in the draft Resolution of the Board of Governors attached to the IDA15 Report "Addi- tions to IDA Resources: Fifteenth Replenishment" dated Janu- ary 31, 2008 (submitted to the Executive Directors of the Asso- ciation for discussion). (Adopted April 3, 2008) 181 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 182 Resolution No. 219 Additions to Resources: Fifteenth Replenishment WHEREAS: (A) The Executive Directors of the International Development Association (the "Association") have considered the prospec- tive financial requirements of the Association and have con- cluded that it is desirable to authorize a replenishment of the resources of the Association for new financing commitments for the period from July 1, 2008, to June 30, 2011 (the "Fifteenth Replenishment") in the amounts and on the basis set out in the report of the IDA Deputies, "Additions to Resources: Fifteenth Replenishment," (the "Report"), approved by the Executive Directors on February 28, 2008, and submitted to the Board of Governors; (B) The members of the Association consider that an increase in the resources of the Association is required and intend to take all necessary governmental and legislative action to authorize and approve the allocation of additional resources to the Asso- ciation in the amounts and on the conditions set out in this Resolution; (C) Members of the Association that contribute resources to the Association in addition to their subscriptions as part of the Fif- teenth Replenishment ("Contributing Members") are to make available their contributions pursuant to the Articles of Agree- ment of the Association (the "Articles") partly in the form of subscriptions carrying voting rights and partly as supplementary resources in the form of contributions not carrying voting rights; (D) Additional subscriptions are to be authorized for Contributing Members in this Resolution on the basis of their agreement with respect to their preemptive rights under Article III, Sec- tion 1(c) of the Articles, and provision is made for the other members of the Association ("Subscribing Members") intend- ing to exercise their rights pursuant to that provision to do so; (E) It is desirable to provide for a portion of resources to be con- tributed by members to be paid to the Association as advance contributions; 182 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 183 (F) Additional subscriptions and contributions are to be author- ized for Contributing Members to provide compensation for the Association's debt forgiveness commitments under the Heavily Indebted Poor Countries ("HIPC") Debt Initiative and to provide financing for arrears clearance operations by the Association; (G) It is desirable to authorize the Association to provide financing in the form of grants, guarantees, and the intermediation of risk management products in addition to loans; and (H) It is desirable to administer any remaining funds from the replenishment authorized by Resolution No. 209 of the Board of Governors of the Association (the "Fourteenth Replenish- ment") as part of the Fifteenth Replenishment. NOW THEREFORE THE BOARD OF GOVERNORS HEREBY ACCEPTS the Report as approved by the Executive Direc- tors, ADOPTS its conclusions and recommendations AND RESOLVES THAT a general increase in subscriptions of the Associa- tion is authorized on the following terms and conditions: 1. Authorization of Subscriptions and Contributions. (a) The Association is authorized to accept additional resources from each Contributing Member in the amounts specified for each such member in Columns (2) (3) (7) and (10) of Table 1 attached to this Resolution, and each such amount will be divided into a subscription carrying voting rights and a contri- bution not carrying voting rights as specified in Table 2 attached to this Resolution. (i) As part of the resources described in paragraph 1(a) above, the Association is authorized to accept additional subscrip- tions and contributions from Contributing Members to compensate the Association for the Association's debt for- giveness commitments under the HIPC Debt Initiative in the amounts and as specified in Column (7) of Table 1 attached to this Resolution. (ii) As part of the resources described in paragraph 1(a) above, the Association is authorized to accept additional subscrip- tions and contributions from Contributing Members to finance arrears clearance operations in the amounts and as specified in Column (10) of Table 1 attached to this Resolution. 183 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 184 (b) The Association is authorized to accept additional resources from any member for which no contribution is specified in Table 2 and additional subscriptions and contributions from Contributing Members incremental to the amounts specified for each such member in Table 1; (c) The Association is authorized to accept additional subscrip- tions from each Subscribing Member in the amount specified for each such member in Table 2. (d) The rights and obligations of the Association and the Con- tributing Members in respect of the authorized subscriptions and contributions in paragraphs (a) and (b) above will be the same (except as otherwise provided in this Resolution) as those applicable to the ninety per cent portion of the initial subscriptions of original members payable under Article II, Section 2(d) of the Articles of Agreement (the "Articles") by members listed in Part I of Schedule A of the Articles. 2. Agreement to Pay. (a) When a Contributing Member agrees to pay its subscription and contribution, or a Subscribing Member agrees to pay its sub- scription, it will deposit with the Association an Instrument of Commitment substantially in the form set out in Attachment I to this Resolution ("Instrument of Commitment") and, with respect to its contribution for debt forgiveness under the HIPC Debt Initiative or for arrears clearance operations, a Contribut- ing Member will either include such contribution in an Instru- ment of Commitment or make a Debt Relief Transfer Contribu- tion, as defined and specified in paragraph 9(a) of this Resolution. (b) When a Contributing Member agrees to pay a part of its sub- scription and contribution without qualification and the remain- der is subject to enactment by its legislature of the necessary appropriation legislation, it will deposit a qualified Instrument of Commitment in a form acceptable to the Association ("Qual- ified Instrument of Commitment") and such member: (i) undertakes to exercise its best efforts to obtain legislative approval for the full amount of its subscription and contri- bution by the payment dates set out in paragraph 3(b) of this Resolution; and (ii) agrees that, upon obtaining such approvals, it will notify the Association that any parts of its Qualified Instrument of Commitment have become unqualified. 184 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 185 3. Payment. (a) Each Subscribing Member will pay to the Association the amount of its subscription in full within 31 days after the date of deposit of its Instrument of Commitment; provided that if the Fifteenth Replenishment shall not have become effective by December 15, 2008, payment may be postponed by the member for not more than 31 days after the Effective Date as defined in paragraph 6(a) of this Resolution. (b) Each Contributing Member that deposits an Instrument of Commitment that is not a Qualified Instrument of Commit- ment will pay to the Association the amount of its subscription and contribution in three equal annual installments no later than 31 days after the Effective Date or as agreed with the Association, January 15, 2010, and January 17, 2011; provided that: (i) the Association and each Contributing Member may agree to earlier payment; (ii) if the Fifteenth Replenishment shall not have become effective by December 15, 2008, payment of the first such installment may be postponed by the member for not more than 31 days after the date on which the Fifteenth Replen- ishment becomes effective; (iii) the Association may agree to the postponement of any installment, or part thereof, if the amount paid, together with any unused balance of previous payments by the Con- tributing Member concerned, is at least equal to the amount estimated by the Association to be required from that member up to the due date of the next installment for purposes of disbursements for financing committed under the Fifteenth Replenishment; and (iv) if any Contributing Member deposits an Instrument of Commitment with the Association after the date when the first installment of the subscription and contribution is due, payment of any installment, or part thereof, will be made to the Association within 31 days after the date of such deposit. (c) If a Contributing Member has deposited a Qualified Instru- ment of Commitment and, upon enactment of appropriation legislation, notifies the Association that an installment, or part thereof, is unqualified after the date when it was due, then pay- ment of such installment, or part thereof, will be made within 31 days after the date of such notification. 185 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 186 4. Mode of Payment. (a) Payments pursuant to this Resolution will be made, at the option of the member: (i) in cash, on terms agreed between the member and the Association; or (ii) by the deposit of notes or similar obligations issued by the government of the member or the depository designated by such member, which shall be non- negotiable, non-interest bearing and payable at their par value on demand to the account of the Association. (b) The Association will encash notes or similar obligations of Contributing Members, on an approximately pro rata basis among donors, in accordance with the encashment schedule set out at Attachment II to this Resolution, or as agreed between a Contributing Member and the Association. With respect to a Contributing Member that is unable to comply with one or more encashment requests, the Association may agree with the member on a revised encashment schedule that yields at least an equivalent value to the Association. (c) The provisions of Article IV, Section 1(a) of the Articles will apply to the use of a Subscribing Member's currency paid to the Association pursuant to this Resolution. 5. Currency of Denomination and Payment. (a) Members will denominate the resources to be made available pursuant to this Resolution in SDRs, the currency of the mem- ber if freely convertible, or, with the agreement of the Associa- tion, in a freely convertible currency of another member, except that if a Contributing Member's economy experienced a rate of inflation in excess of ten percent per annum on average in the period 2004­2006, as determined by the Association, its subscription and contribution will be denominated in SDRs or in any currency used for the valuation of the SDR and agreed with the Association. (b) Contributing Members will make payments pursuant to this Resolution in SDRs, a currency used for the valuation of the SDR, or, with the agreement of the Association, in another freely convertible currency, and the Association may freely exchange the amounts received as required for its operations. Subscribing Members will make payments in the currency of the member or in a freely convertible currency with the agree- ment of the Association. (c) Each member will maintain, in respect of its currency paid by it under this Resolution, and the currency of such member derived therefrom as principal, interest or other charges, the same con- vertibility as existed on the effective date of this Resolution. 186 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 187 (d) The provisions of Article IV, Section 2 of the Articles with respect to maintenance of value will not be applicable. 6. Effective Date. (a) The Fifteenth Replenishment will become effective and the resources to be contributed pursuant to this Resolution will become payable to the Association on the date (the "Effective Date") when Contributing Members whose subscriptions and contributions aggregate not less than SDR 9,696 million shall have deposited with the Association Instruments of Commit- ment, Qualified Instruments of Commitment or Debt Relief Transfer Notifications (as defined in paragraph 9 (b) of this Resolution), provided that this date shall be not later than December 15, 2008, or such later date as the Executive Direc- tors of the Association may determine. (b) If the Association determines that the availability of additional resources pursuant to this Resolution is likely to be unduly delayed, it shall convene promptly a meeting of the Contribut- ing Members to review the situation and to consider the steps to be taken to prevent a suspension of financing to eligible recipients by the Association. 7. Advance Contributions. (a) In order to avoid an interruption in the Association's ability to commit financing to eligible recipients pending the effectiveness of the Fifteenth Replenishment, the Association may deem, prior to the Effective Date, one third of the total amount of each subscription and contribution for which an Instrument of Commitment has been deposited with the Association, or for which a Debt Relief Transfer Notification (as defined in para- graph 9(b) of this Resolution) has been received by the Associ- ation, as an "Advance Contribution," unless the Contributing Member specifies otherwise in its Instrument of Commitment or Debt Relief Transfer Notification. (b) The Association shall specify when Advance Contributions pursuant to subparagraph (a) are to be paid to the Association. (c) The terms and conditions applicable to contributions to the Fif- teenth Replenishment shall apply also to Advance Contributions until the Effective Date, when such contributions shall be deemed to constitute payment towards the amount due from each Contributing Member for its subscription and contribution. (d) In the event that the Fifteenth Replenishment shall not become effective pursuant to paragraph 6(a) of this Resolu- tion, (i) voting rights will be allocated to each member for the 187 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 188 Advance Contribution as if it had been made as a subscription and contribution under this Resolution, and (ii) each member not making an Advance Contribution will have the opportunity to exercise its preemptive rights under Article III, Section 1(c) of the Articles with respect to such subscription as the Associa- tion shall specify. 8. Commitment Authority. (a) Subscriptions and contributions will become available for commitment by the Association for financing to eligible recipi- ents in three equal annual installments: (i) the first installment will become available to the Association for commitment from the Effective Date, provided that advance contributions may become available earlier under paragraph 7(a) of this Resolu- tion; (ii) the second installment will become available from July 1, 2009, and (iii) the third installment will become avail- able from July 1, 2010. (b) Any qualified part of a subscription and contribution notified under a Qualified Instrument of Commitment will become available for commitment by the Association for financing when the Association has been notified, pursuant to paragraph 2(b) (ii) of this Resolution, that such parts have become unqualified. (c) The Association may enter into financing commitments with eligible recipients conditional on such commitments becoming effective and binding on the Association when resources under the Fifteenth Replenishment become available for commit- ment by the Association. 9. HIPC and Arrears Clearance Contributions. (a) Contributing Members making an additional subscription and contribution to compensate the Association for forgiveness of debt under the HIPC Debt Relief Initiative or to finance arrears clearance operations, will do so either: (i) through an additional subscription and contribution to the Association's regular resources (a "Debt Relief Additional Contribution") or (ii) through a contribution to the HIPC Debt Initiative Trust Fund administered by the Association (a "Debt Relief Transfer Contribution"). (b) Contributing Members making a Debt Relief Transfer Contri- bution will either (i) enter into a Contribution Agreement with the Association as administrator of the Debt Relief Trust Fund; or (ii) for Contributing Members that are already current con- 188 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 189 tributors to the Debt Relief Trust Fund, send to the Association a notice of additional contribution, (each constituting a "Debt Relief Transfer Notification"). Such Debt Relief Transfer Noti- fication will provide for a contribution to be made to the Debt Relief Trust Fund in the amounts set forth in Columns (7) and (10) of Table 1 to this Resolution, each to be payable in three equal annual installments no later than 31 days after the Effec- tive Date, January 15, 2010, and January 17, 2011; provided that the Association and each Contributing Member may agree to earlier payment. (c) When any amount of a Debt Relief Transfer Contribution is paid to compensate the Association for forgiveness of debt under the HIPC Debt Initiative or to finance arrears clearance operations, such amount of the Debt Relief Transfer Contribu- tion will be treated as a subscription and contribution under the Fifteenth Replenishment. 10. Authorization of Grants, Guarantees, and Risk Intermediation. The Association is hereby authorized to provide financing under the Fifteenth Replenishment in the form of grants and guarantees and through the intermediation of risk management products. 11. Administration of IDA14 Funds under the Fifteenth Replenishment. (a) On the Effective Date, any funds, receipts, assets and liabilities held by the Association under the Fourteenth Replenishment will be administered under the Fifteenth Replenishment, sub- ject, as appropriate, to the terms and conditions applicable to the Fourteenth Replenishment. (b) Pursuant to Article V, Section 2(a)(i) of the Articles of Agree- ment of the Association, the Association is authorized to use the funds referred to in paragraph 11(a) above, and funds derived therefrom as principal, interest, or other charges, to provide financing in the forms of grants and guarantees under the terms, conditions, and policies applicable under the Fif- teenth Replenishment. 12. Allocation of Voting Rights under Fifteenth Replenishment. Voting rights calculated on the basis of the current voting rights system will be allocated to members for subscriptions under the Fifteenth Replenishment as follows: (a) Each Subscribing Member that has deposited with the Associa- tion an Instrument of Commitment will be allocated the sub- scription votes specified for each such member in Table 2 on the 189 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 190 effective payment date pursuant to paragraph 3(a) of this Reso- lution. Each Subscribing Member will be allocated the addi- tional membership votes specified in Column c-3 of Table 2 on the date such member is allocated its subscription votes. (b) Each Contributing Member that has deposited with the Associ- ation an Instrument of Commitment will be allocated one-third of the subscription votes specified for each such member in Table 2 on each effective payment date pursuant to paragraph 3(b) of this Resolution. Each Contributing Member will be allocated the additional membership votes specified in Column b-4 of Table 2 for its subscription on the date such member is allocated the first one-third of its subscription votes. (c) Each Contributing Member that has made a Debt Relief Trans- fer Contribution will be allocated a proportionate share of the subscription votes specified for such member in Column b-3 of Table 2 from time to time and at least semi-annually following payment of any amount of its Debt Relief Transfer Contribu- tion to compensate the Association for forgiveness of debt under the HIPC Debt Initiative or to finance arrears clearance operations. (d) Each member that has deposited with the Association a Quali- fied Instrument of Commitment will be allocated subscription votes at the time and to the extent of payments made in respect of its subscription and contribution. (e) Any member that deposits its Instrument of Commitment after any of these dates will be allocated, within 31 days of the date of such deposit, the subscription votes to which such member is entitled on account of such deposit. (f) If a member fails to pay any amount of its subscription or sub- scription and contribution when due, the number of subscrip- tion votes allocated from time to time to such member under this Resolution in respect of the Fifteenth Replenishment will be reduced in proportion to the shortfall in such payments, but any such votes will be reallocated when the shortfall in pay- ments causing such adjustment is subsequently made up. (Adopted on April 23, 2008) 190 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 191 191 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 192 192 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 193 193 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 194 194 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 195 195 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 196 RESOLUTION ADOPTED BY THE BOARD OF GOVERNORS OF IDA AT THE 2008 ANNUAL MEETINGS Resolution No. 220 Financial Statements,Accountants' Report, and Administrative Budget RESOLVED: THAT the Board of Governors of the Association consider the Financial Statements, Accountants' Report, and Administrative Bud- get, included in the 2008 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 October 13, 2008) 196 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 197 RESOLUTION ADOPTED BY THE COUNCIL OF GOVERNORS OF MIGA BETWEEN THE 2007 AND 2008 ANNUAL MEETINGS Resolution No. 80 Election of Directors RESOLVED: (a) That the 2008 Regular Election of Directors shall take place in accordance with the attached Rules; and (b) That a Regular Election of Directors shall take place in con- nection with the Annual Meeting of the Council of Governors in 2010. (Adopted August 1, 2008) 197 6135-CH04_p160-198.pdf 4/1/09 12:13 PM Page 198 RESOLUTION ADOPTED BY THE COUNCIL OF GOVERNORS OF MIGA AT THE 2008 ANNUAL MEETINGS Resolution No. 81 Financial Statements and the Report of the Independent Accountants RESOLVED: THAT the Council of Governors of the Agency consider the Finan- cial Statements and the Report of Independent Accountants included in the 2008 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 October 13, 2008) 198 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 199 REPORTS OF THE EXECUTIVE DIRECTORS OF THE BANK April 22, 2008 Transfer from Surplus to Replenish the 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 mil- lion 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 rele- vant 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 transfer 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 Direc- tors 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. Additional funding was provided by transfers from surplus or net income approved by the Bank's Board of Governors on February 3, 1997 (US$90 million, Resolution 511), July 13, 1998 (US$90 million, Res- olution No. 519), September 30, 1999 ($60 million, Resolution No. 529), February 4, 2004 (US$80 million, Resolution No. 556) and Jan- uary 31, 2007 (US$50 million, Resolution No. 584). 199 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 200 2. In view of the material contribution that the Bank's financial assis- tance makes to Palestinian economic welfare, the Executive Direc- tors 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$55 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 June 4, 2008) 1 See page 172. 200 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 201 May 29, 2008 Transfer of IBRD Surplus to Food Price Crisis Response Trust Fund 1. In view of the need for assistance to countries as a result of the food price crisis and in order to promote the purposes of the Inter- national Bank for Reconstruction and Development (the "IBRD") and the International Development Association (IDA or the "Association") (collectively, the "Bank") in these circumstances, the Executive Directors of the Bank consider that a trust fund should be established forthwith to assist those countries as an ini- tiative for the benefit of the members of the Association as part of a multi-donor facility.The Executive Directors of the IBRD recom- mend that the Board of Governors of the IBRD authorize the immediate transfer from surplus of $85 million to the Food Price Crisis Response (FPCR) Trust Fund. 2. Accordingly, the Executive Directors of the IBRD recommend that the Board of Governors of the Bank adopt the draft resolution. . . .1 (This report was approved and its recommendation was adopted on June 13, 2008) 1 See page 172. 201 6135-CH05_p199-226.pdf 4/2/09 2:50 PM Page 202 June 13, 2008 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 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 2008 Joint Committee on the Remuneration of Executive Directors and their Alternates (JCR). 2. The JCR met in Paris on April 28­29, 2008, and in Washington, D.C. on June 13, 2008. 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 started in 2000 to undertake a full-scale review every four years, with a streamlined review being undertaken in the intervening years. REMUNERATION 3. In accordance with the longstanding practice of JCRs, the Commit- tee considered the roles and responsibilities of Fund and Bank Executive Directors; budgetary and governance developments in the two institutions--including the expenditure reductions in the Offices of Fund Executive Directors; and factors relevant to the remuneration of Executive Directors and Alternates. These factors included the internal positioning of Executive Directors' remuner- ation relative to the compensation of the organizations' manage- ment and staff; information on compensation levels and develop- ments in the public sectors of selected member countries and other international organizations; the effects of consumer price increases on the real income of Executive Directors; and the current year's salary increases for other Fund and Bank personnel. 4. With respect to issue of internal positioning, the Committee--like its predecessors--considered it important to position the remuner- ation of Executive Directors at an appropriate level in order to reflect their responsibilities in the governance of the institutions. In this respect, the Committee was of the view that the maintenance of an appropriate relationship of Executive Directors' salaries to the remuneration of the Heads of the two institutions is the most 202 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 203 relevant criterion to be taken into account given their respective roles within the decision-making and governance structures of the institutions. This is also consistent with the provision of the By- Laws of the Fund and the Bank that "In making proposals with respect to the remuneration of Executive Directors and their Alternates, the Committee shall bear in mind their functions under the Articles of Agreement of the [Fund] [Bank] in relation to those of the [Managing Director] [President]."1 While recognizing that past JCRs had been careful to avoid any link between the salaries of senior staff and Executive Directors in order to avoid any con- flict of interest on the part of the Executive Boards, which decide the salaries of Fund and Bank staff, the Committee felt that a pri- mary reference to the salary of the Heads of the institutions would address more effectively any conflict-of-interest concerns, because the salaries of the Managing Director and President are approved by the Boards of Governors of the institutions.The Committee also noted that the decline in the level of Executive Directors' remu- neration relative to the senior staff salary structures that has occurred since the mid-1990s, was largely attributable to upward shifts in the higher ranges of the staff salary structure in response to competitive market pressures, which are not directly relevant to the position of Executive Directors. 5. The Committee noted that over the past twenty years, the relation- ship between the remuneration of Executive Directors and the total remuneration (salary and non-pensionable allowance) of the two Heads has been fairly stable--although declining slightly from about 46 percent in the early 1990s to the current level of 44.3 per- cent. In terms of the base salary of the Fund's Managing Director and the World Bank President, the remuneration of Executive Directors currently stands at 52 percent.2 The Committee consid- ered these relationships to be broadly appropriate. It was also reas- sured, in this connection, by data showing that, over the past two decades, the educational and professional profiles of Executive Directors have remained of high standards and relevant to the func- tions of the institutions. The Committee further noted that a 1 Section 14 (e) (ii) of the By-Laws of the Fund and Section 13 (e) (ii) of the By- Laws of the Bank. 2 This ratio is lower than in the 1990s, but the decline results almost entirely from the restructuring of the components of the remuneration of the Managing Director and President; the restructuring raised the level of the base salary and reduced corre- spondingly the amount of the allowance. 203 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 204 broadly similar relationship between the salaries of Executive Directors and those of the Heads of the institutions exists in other international financial institutions with a resident Executive Board.3 6. In light of this, the Committee has referred primarily to the rela- tionship to the base salary of the Heads of the two institutions in assessing the appropriate internal positioning of the remuneration levels of Executive Directors, and recommends that future JCRs follow a similar approach. Significant deviations from the current ratio of 52 percent should be carefully evaluated, including with respect to any corrective actions that the JCR may deem warranted. 7. As part of its comprehensive review, the 2008 Committee also looked at the remuneration developments in external comparator positions in a number of countries. Recognizing that past JCRs had raised concerns about the limited usefulness of external compara- tor surveys relative to the resource costs involved, the Committee narrowed its review of external comparability to the salary levels and recent adjustments for senior civil servants in the ministries of finance and central banks of the G7 countries. While emphasizing the limited scope of the review, which cannot be considered to be representative of salary developments across the membership at large, the Committee was nevertheless reassured that available data suggest that there appear not to be major anomalies between the salaries of Executive Directors and of comparator positions in national public sectors. The Committee also noted that 2007­2008 salary increases for senior personnel in the civil service and central banks of large industrial countries appear, on the whole, to be broadly aligned with CPI increases, although there is significant variation across the G7 countries. 8. The Committee also considered the following data: ˇ The consumer price index (CPI) for the Washington Metropolitan area has risen by 5.0 percent (May 2007 to May 2008). The remu- neration of the Managing Director of the Fund and the President of the Bank are linked to the May-to-May change in the Washing- ton Metropolitan area CPI in years between major reviews (nor- mally carried out at the start of an appointment term) and will therefore be increased by 5 percent with effect from July 1, 2008. 3 African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, and Inter-American Development Bank. 204 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 205 ˇ The salary structure for the Fund's professional and managerial staff (Grades A9­B5) has been increased uniformly by 4.2 per- cent with effect from May 1, 2008. The salaries of the Fund's Deputy Managing Directors, which are indexed on the same basis as the remuneration of the Managing Director, will be increased by 5 percent on July 1, 2008. ˇ The proposed increase in the salary structure for the World Bank's staff, which is currently pending with the Executive Board and is to be effective from July 1, 2008, averages 3.3 per- cent with increases ranging between 1.6 percent and 4.4 percent at the professional and managerial grades.4 9. The JCR reviewed the parallelism between the remuneration of Fund and Bank Executive Directors, and concluded that there con- tinues to be justification for their remuneration to be set at the same level. 10. Taking all the above considerations into account, the JCR recom- mends an increase in the salary of Executive Directors equal to the May 2007-to-May 2008 CPI increase for the Washington Metropol- itan area.5 This increase of 5 percent would raise the salary of Executive Directors from $219,800 to $230,790 effective on July 1, 2008, and would allow the ratio of the remuneration of Executive Directors to the base salary of the Heads of the two institutions to be maintained at about 52 percent. 11. The JCR considers that, at 86.5 percent, the ratio between the salary of Alternate Executive Directors and that of Executive Directors continues to be appropriate, and accordingly recommends the same CPI related increase in the salary of Alternate Executive Directors from $190,140 to $199,650 effective on July 1, 2008. BENEFITS 12. Within the framework of the applicable resolutions of the Fund and Bank Boards of Governors, each year's JCR considers the pos- sible extension of any new or modified benefits for Fund and Bank 4 This does not include the staff salary ranges at Grades J and K, which will be raised by about 5 percent. 5 The salaries of both Executive Directors and Alternate Executive Directors cur- rently constitute their total remuneration; beginning in 2000, no separate supplemen- tal allowances have been paid. 205 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 206 staff to Executive Directors and their Alternates, and whether the extension of such benefits would require the approval of the Board of Governors or may be left to the Executive Boards of the Fund and Bank.6 The Committee accordingly considered the following changes to the benefits of IMF staff that were adopted after the 2007 JCR meeting: (a) The provisions governing the existing early retirement benefits under the Staff Retirement Plan (SRP) were revised to provide greater flexibility for staff with shorter service by providing an additional option that allows staff with three or more years of service to retire with an immediate, but actuarially reduced, pension between 50 and 55 years of age (rather than from age 55) and, in most cases, somewhat lowers the size of the early retirement reductions in the level of pensions. (b) The eligibility for existing benefits under the Staff Retirement Plan and for Spouse and Child Allowances was extended to the domestic partners of staff members on the same basis as staff members' spouses, and, for purposes of benefit entitlements, a more consistent interpretation of marriage--based on the laws of the jurisdiction where the marriage occurs--was adopted. These changes substantially completed the process started in 2000 (which has previously applied to Executive Directors) of providing comparable treatment under the Fund's personnel policies and benefit programs to staff in traditional and non- traditional family relationships. 13. The Committee also considered changes to World Bank's Staff Retirement Plan (SRP) that are currently pending with the Bank's Executive Board. The principal change involves a modest reduc- tion in the size of the current actuarial reductions applicable to early retirement pensions under one of the two components--the defined benefit pension--of the Plan. 14. The JCR determined that it would be appropriate to make the Fund's benefit changes and, subject to Executive Board approval, the Bank's SRP changes applicable to the Executive Directors and Alternate Executive Directors of the respective organizations. 6 IMF Board of Governors Resolutions No. 34-7, adopted on July 20, 1979 and No. 31-1, adopted on October 16, 1975, and World Bank Board of Governors Reso- lutions 337, adopted on July 20, 1979, and 301, adopted October 16, 1975. 206 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 207 There are compelling practical reasons for maintaining consistency of benefits between Executive Directors and staff, as the need to provide benefits with different provisions would add greatly to administrative complexity and costs. 15. With regard to whether the extension of these benefit changes at the Fund to Executive Directors would require the approval of the Board of Governors or may be left to the Fund's Executive Board, the Committee carefully considered the effects that the changes would have on Executive Directors and Alternates.The Committee determined that the changes would not alter the basic nature of the Fund's existing retirement benefits, and they would have a rela- tively small effect on the overall cost of the Plan and general level of SRP benefits. Depending on individuals' age and length of ser- vice at their separation, it is expected that the SRP benefits of some Executive Directors and Alternates could be raised, with an appreciable increase in a small minority of cases. However, the benefits of the substantial majority of Executive Directors would not change significantly or at all. 16. Taking into account all of these considerations, the Committee has concluded that the Fund's SRP changes are such that it is not nec- essary to seek the approval of the Board of Governors for the changes to be applied to the Fund's Executive Directors and Alter- nates; they may be made available to Fund Executive Directors and Alternates by the Fund's Executive Board. 17. The Committee also carefully considered the effects of the changes to the Bank's SRP and the Fund's extension of domestic partner benefits. In both cases, the Committee similarly concluded that the changes would not alter the basic nature of the respective organi- zation's existing benefits, and they would not have a significant impact on the overall cost of the benefit programs or the value of the benefits. The Bank's SRP revision would have only a limited impact on approximately one-half of the value of the retirement benefit. (The other half of the Plan is a "cash balance" payment that would not be affected by the proposed change in the defined benefit component.) The impact of the Fund's benefits changes would also be limited and, as noted, completes a set of measures already applied to Executive Directors. The Committee accord- ingly concluded that these benefits may be made available to Bank and Fund Executive Directors and Alternates by the respective Executive Boards. 207 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 208 18. In addition, the JCR followed up on an issue that had arisen in 2007 in the Fund's Committee on Executive Board Administrative Matters (CAM)--and was discussed on a preliminary basis by the 2007 JCR--in connection with the alignment of the home leave policy for Fund Executive Directors with the new home leave pol- icy for Fund staff.7 To achieve a more full alignment with the home leave provisions applicable to Fund staff, it had been suggested at that time that consideration be given to: (a) extending the home leave entitlement to Executive Directors and Alternates them- selves (now only their family members are eligible); and (b) grant- ing an initial home leave entitlement within the first two-year period of service (at present, the initial entitlement is earned in the third year of service). The JCR noted that these suggestions would involve significant changes to the home leave provisions for Execu- tive Directors and Alternates, as prescribed by the Fund's By-Laws, with potentially non-negligible cost implications. Given the climate of significant budgetary constraint within the Fund--including in the Offices of Executive Directors themselves--and without pre- judging the rationale of the suggested changes, the Committee felt that it would not be appropriate to pursue this matter or to seek the Governors' approval of such changes at the present time. JCR PROCESS 19. The 2008 JCR agreed with previous Committees that there is scope for further streamlining the JCR process while safeguarding its effectiveness and independence. The Committee considered a range of options towards this end, and saw as most promising a process by which--in the years between full-scale reviews (which would continue to be scheduled at four-year intervals), and barring exceptional or unexpected developments--future JCRs would pro- pose a salary increase for Executive Directors equal to the year's (May-to-May) percentage increase in the consumer price index for the Washington Metropolitan area. 7 Paragraphs 20-23 of the 2007 JCR Report discuss the alignment of the home leave policy in some detail. 208 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 209 20. This approach would align the JCR process more closely with the present process for adjusting the remuneration of the Managing Director and World Bank President in the years between the com- prehensive reviews carried out at the start of their appointment terms. It would also be cost-saving by introducing the expectation that the JCR would not usually meet annually as it has in the past. At the same time, and consistent with the provisions of the Fund and Bank By-Laws, JCRs would continue to be constituted each year in order to decide whether to endorse application of the indexation formula or to determine if there are reasons to depart from it.8 The availability of a Committee in the years between full- scale reviews would ensure that all relevant factors for assessing the remuneration of Executive Directors would continue to be considered on a timely basis. The annual constitution of a JCR would also permit benefits issues to continue to be addressed as they arise, possibly through written communication among Com- mittee members. 21. In light of the foregoing considerations, the Committee recom- mends that, barring exceptional or unexpected developments, the 2009-2011 JCRs propose a salary increase for Executive Directors and Alternate Executive Directors equal to the year's (May-to- May) percentage increase in the CPI for the Washington Metropol- itan area.9 The next full-scale review, expected to take place in 2012, would then be an opportunity to take stock of the experience with this new, streamlined process. 8 Section 14(e) of the Fund By-Laws and Section 13(e) of the Bank By-Laws. 9 The specific index that would be used for this purpose is the U.S. Bureau of Labor Statistics Regional (Washington, Baltimore, Maryland, Virginia, West Virginia) Con- sumer Price Index for All Urban Consumers, or its equivalent replacement. 209 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 210 RECOMMENDATIONS REQUIRING A VOTE BY THE GOVERNORS 22. In light of the recommendations on remuneration of Fund and Bank Executive Directors and their Alternates (paragraphs 10 and 11 above), the Committee recommends that the draft resolutions . . .1 for the Fund and the Bank, included in Attachments I and II, be adopted by the respective Boards of Governors of the Fund and the Bank. 23. The Joint Committee directs the Secretary of the Fund and the Vice President and 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 Sec- tions 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 on July 25, 2008) 1 See page 172. 210 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 211 July 9, 2008 2008 Regular Election of Executive Directors 1. Pursuant to Resolution No. 576 of the Board of Governors, a Reg- ular Election of Executive Directors will take place in connection with the 2008 Annual Meeting of the Board of Governors. It is pro- posed that this Regular Election be conducted by rapid means of communication so as to conclude a reasonable time in advance of November 1, 2008, 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 representation, prompt corrective action would be called for. 3. The Executive Directors recommend that the maximum and mini- mum percentages of eligible votes required for election of an Exec- utive Director be 10 percent and 2 percent, respectively. They believe that such percentages would provide a range that is broad enough in the circumstances. 4. The Executive Directors recommend that the date from which the 2008 Regular Election will be effective be November 1, 2008. 5. The Executive Directors note that under the Articles of Agree- ment 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 2010. 211 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 212 7. The Executive Directors recommend the adoption by the Board of Governors of the attached Rules for the 2008 Regular Election of Executive Directors, which provide for the conduct of this Election by rapid means of communication. 8. The draft Resolution . . .1, embodying the above recommenda- tions, 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 1, 2008) 1 See page 173. 212 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 213 Rules for the 2008 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 Chair- man 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 Cor- porate Secretary of the Bank. (f) "Election" means the 2008 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 conduct- ing ballots so as to conclude a reasonable time in advance of November 1, 2008, 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 Schedule B of the Articles shall apply to the conduct of the elec- tion, except that: (a) "two percent" shall be substituted for "fourteen percent" in Paragraphs 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 substituted for the "seventh" in Paragraph 6 thereof. 213 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 214 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 dur- ing a suitable period specified by the Secretary. (b) Each nomination shall be made on a nomination form fur- nished 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. (e) If a nominee withdraws from the ballot after the closing date of the nomination period, but before the closing date of the bal- lot, the Secretary shall inform all Governors eligible to vote of such withdrawal and invite them to submit nominations of a candidate by rapid means of communication, during a suitable period specified by the Secretary. At the end of the prescribed period of time for this nomination, the Secretary shall compile a new list of candidates with all individuals who were nomi- nated by at least one Governor in either nomination period, and circulate that list by rapid means of communication to all Governors eligible to vote with an invitation to vote through similar channels before the end of the balloting period. 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. 214 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 215 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 2008 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 bal- lot 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 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 B10 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 per- cent 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 10Paragraph 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 num- ber, and so on until ten percent is reached. 215 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 216 (b) those Governors whose votes for a nominee elected on the preceding ballot are deemed under Paragraph 4 of Schedule B to have raised the votes cast for such nominee above ten per- cent of the eligible votes. 12. If the votes cast by a Governor bring the total votes received by a nominee 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. 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 low- est number of votes, no nominee shall be dropped from the next succeeding ballot, but if the same situation is repeated on such suc- ceeding ballot, the Chairman shall eliminate by lot one of such nominees from the next succeeding ballot. 216 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 217 ANNOUNCEMENT OF THE RESULT 17. After the tally of the last ballot, the Chairman shall cause to be dis- tributed a statement setting forth the result of the election. EFFECTIVE DATE OF ELECTION 18. The effective date of the election shall be November 1, 2008, and the term of office of the elected Executive Directors shall com- mence 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. When- ever possible, any such questions shall be put without identifying the members or Governors concerned. 217 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 218 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 2008 REGULAR ELECTION OF EXECUTIVE DIRECTORS STATEMENT OF RESULTS OF ELECTION, OCTOBER 13, 2008 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Svein AASS 54,039 Denmark 13,701 Estonia 1,173 Finland 8,810 Iceland 1,508 Latvia 1,634 Lithuania 1,757 Norway 10,232 Sweden 15,224 Abdulrahman M. ALMOFADHI 45,045 Saudi Arabia 45,045 Jorge Humberto BOTERO 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 Dante CONTRERAS 37,499 Argentina 18,161 Bolivia 2,035 Chile 7,181 Paraguay 1,479 Peru 5,581 Uruguay 3,062 218 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 219 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes 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 James HAGAN 55,800 Australia 24,714 Cambodia 464 Kiribati 715 Korea, Republic of 16,067 Marshall Islands 719 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 Merza H. HASAN 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 2,462 219 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 220 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Konstantin HUBER 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 Dhanendra KUMAR 54,945 Bangladesh 5,104 Bhutan 729 India 45,045 Sri Lanka 4,067 Alexey G. KVASOV 45,045 Russian Federation 45,045 Giovanni MAJNONI 56,705 Albania 1,080 Greece 1,934 Italy 45,045 Malta 1,324 Portugal 5,710 San Marino 845 Timor-Leste 767 Toga MCINTOSH 54,347 Angola 2,926 Botswana 865 Burundi 966 Ethiopia 1,228 Gambia, The 793 Kenya 2,711 Lesotho 913 Liberia 713 Malawi 1,344 Mozambique 1,180 Namibia 1,773 Nigeria 12,905 220 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 221 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes 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 Michel MORDASINI 49,192 Azerbaijan 1,896 Kyrgyz Republic 1,357 Poland 11,158 Serbia 3,096 Switzerland 26,856 Tajikistan 1,310 Turkmenistan 776 Uzbekistan 2,743 Louis Philippe ONG SENG 31,102 Benin 1,118 Burkina Faso 1,118 Cameroon 1,777 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 Mauritius 1,492 Niger 1,102 Rwanda 1,296 Sao Tome and Principe 745 Senegal 2,322 Togo 1,355 221 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 222 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Jose A. ROJAS R. 72,786 Costa Rica 483 El Salvador 391 Guatemala 2,251 Honduras 891 Mexico 19,054 Nicaragua 858 Spain 28,247 Venezuela, Rep. 20,611 Bolivariana de Ruud TREFFERS 73,146 Armenia 1,389 Bosnia and Herzegovina 799 Bulgaria 5,465 Croatia 2,543 Cyprus 1,711 Georgia 1,834 Israel 5,000 Macedonia, FYR 677 Moldova 1,618 Montenegro 938 Netherlands 35,753 Romania 4,261 Ukraine 11,158 Sun VITHESPONGSE 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 1,218 222 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 223 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Samy WATSON 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 528 Grenadines ZOU Jiayi 45,049 China 45,049 Total Number of Members Voted 177 1,012,392 /s/ /s/ Carmen Maria Madriz Contreras Carl-Hermann G. Schlettwein (Costa Rica) (Namibia) Teller Teller 223 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 224 August 7, 2008 Allocation of FY08 Net Income 1. The General Reserve (including cumulative exchange rate transla- tion adjustment) of the IBRD as of June 30, 2008 was $25,888 million. As of that date, the surplus of the IBRD was $0 million, and the Spe- cial Reserve created under Article IV, Section 6 of the IBRD's Arti- cles of Agreement totaled $293 million. The IBRD's reported net income for the fiscal year ended June 30, 2008 (FY08) amounted to 1,491 million. IBRD's Operating Income (referred to as "Net income before Board of Governors-Approved Transfers and net unrealized (losses) gains on non-trading derivatives and borrowings measured at fair value, per FAS 133 as amended" in the FY08 external financial statements) is used as net income for annual net income allocation purposes. For FY08, Operating Income was $2,271 million, of which $10 million is excluded from allocable net income and has been trans- ferred to the Externally Financed Outputs Adjustment Account. 2. The Executive Directors have considered what action to take, or to recommend that the Board of Governors take, with respect to FY08 net income. The Executive Directors have concluded that the interests of the IBRD and its members would best be served by the following dispositions of the net income of the IBRD: (a) the addition of $811 million to the General Reserve, plus or minus any rounding amount less than $1 million; (b) the addition of $117 million to the pension reserve represent- ing 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 $583.3 million, from FY08 allocable net income, which amount would be usable to provide financing in the form of grants in addition to loans; (d) the retention as surplus of $635 million; and (e) the transfer to the Kosovo Sustainable Employment Develop- ment Trust Fund, by way of a grant of $40 million, from surplus. 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 September 9, 2008) 1 See page 173. 224 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 225 REPORTS OF THE BOARD OF DIRECTORS OF IDA December 6, 2007 Latvia--Change in Membership Status 1. Latvia is a Part II member of the Association. Latvia 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 Latvia recognize the financial responsibility associ- ated with Part I membership in the Association. Latvia has also requested that its voting rights, derived from its cumulative sub- scriptions 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 Latvia 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 its status in the Association. (This report was approved and its recommendation was adopted by the Board of Governors on January 22, 2008) 1 See page 178. 225 6135-CH05_p199-226.pdf 4/1/09 12:12 PM Page 226 February 20, 2008 Membership of the Republic of Lithuania 1. In accordance with Section 9 of the By-Laws of the International Development Association, the application of the Republic of Lithuania for membership in the Association is hereby submitted to the Board of Governors. 2. The draft Resolution . . .1 is consistent with membership Resolu- tions with respect to countries joining IDA as "Part I" members. 3. The Republic of Lithuania has indicated that it will make a sub- scription and contribution to the Association as part of the upcom- ing Fifteenth Replenishment of the Association. It will also have the option to contribute to the replenishment of the Association's resources to finance the Multilateral Debt Relief Initiative. 4. Representatives of the Republic of Lithuania have been consulted informally regarding the terms and conditions recommended in the attached draft Resolution and they have confirmed that these terms and conditions are acceptable. 5. The draft Resolution . . .1 is recommended for adoption by the Board of Governors. (This report was approved and its recommendation was adopted by the Board of Governors on April 3, 2008) 1 See page 179. 226 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 227 February 28, 2008 Additions to Resources: Fifteenth Replenishment INTRODUCTION 1. An important channel for multilateral aid. Since its inception in 1960, the International Development Association (IDA) has played a pivotal role in the global aid architecture. It is the largest multilateral channel for providing concessional financing to devel- oping countries with per capita incomes mainly below USD 1,065.1 Working with client countries and donors, IDA supports low- income countries in their efforts to achieve broad-based growth, reduce poverty, and improve living standards of the poor. Given its poverty focus, IDA directs a large share of its resources to coun- tries where people earn less than two dollars a day.2 2. A vital role in the global aid architecture. With the global aid architecture becoming more complex, IDA's role in developing countries has become all the more important. Not only does IDA provide direct financing, policy advice, and knowledge services to client countries, but it also serves as a platform for the effective delivery of overall aid. To perform its dual role, IDA relies on its unique strengths: the scale of its financial resources; extensive knowledge base and the quality of its policy advice; global reach combined with local presence; multi-sectoral perspective; and its convening power. Further, IDA's ability to adapt to individual country circumstances, to act as a "first mover" when appropriate, and to leverage funding from other partners to scale up poverty- reducing interventions, allows it to play a vital role in reaching the poor. A strong replenishment allows IDA to play its role as a plat- form for other development partners to obtain results at the coun- try level. 3. IDA's sources of funding. IDA's resources come mainly from con- tributions by governments of its donor countries. The number of donors has grown over time to 45, to include both developed and middle-income developing countries. Donors provide resources 1 IDA's operational per capita income cut-off in FY08. 2 Based on definition provided in Chen and Ravallion (2004). "How Have the World's Poorest Fared Since the Early 1980s?" World Bank Research Observer, Vol. 19, No. 2, pages 141­169. 227 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 228 according to arrangements reached during periodic replenishment negotiations held every three years. Other sources of IDA funding include repayments on outstanding credits, IDA investment income, and transfers from the International Bank for Reconstruc- tion and Development (IBRD) and the International Finance Cor- poration (IFC). 4. The Fifteenth Replenishment of IDA. Representatives of donor governments ("the IDA Deputies") and representatives of bor- rower countries (collectively referred to in this report as the "Par- ticipants") negotiated the Fifteenth Replenishment of IDA's resources under the chairmanship of Mr. Vincenzo La Via, Chief Financial Officer of the World Bank Group.3 To make the discus- sions transparent and to solicit views from a range of stakeholders, Participants consulted with African opinion leaders in Maputo, Mozambique in June 2007 and invited and received comments from civil society on the draft Deputies' report. In addition, all rel- evant policy papers discussed at the replenishment meetings were posted on IDA's external website prior to each meeting, and sum- maries of the discussions were posted following the meetings. This report contains the Participants' guidance on the policy and finan- cial framework that underpins IDA's support for economic devel- opment and poverty reduction in eligible countries during the IDA15 period (July 1, 2008 to June 30, 2011). 5. Noteworthy points. The IDA15 replenishment discussions were noteworthy for several reasons. First, the discussions focused on consolidating, strengthening, and fine-tuning many significant changes in the policy framework that were put in place during past replenishments, including those relating to the grants framework, results measurement system, resource allocation system, and assis- tance to post-conflict countries. Second, Participants examined IDA's role in a complex global aid architecture and concluded that IDA plays a unique role in reaching the poor, integrating multiple donor programs, supporting country ownership, and acting flexibly and quickly, to contribute to results at the country level. Third, Par- ticipants reviewed IDA's role in enhancing development effective- ness of aid at the country level through harmonization and align- ment as well as through its leadership on the results agenda, while 3 IDA15 meetings: March 5­6, 2007, Paris, France; June 28­30, 2007, Maputo, Mozambique; October 23, 2007, Washington D.C., USA; November 12­13, 2007, Dublin, Ireland; and December 13­14, 2007, Berlin, Germany. 228 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 229 recognizing the importance of simultaneously implementing the broader Paris Declaration, and urged IDA to set the highest stan- dards for itself on both fronts. Fourth, Participants reassessed IDA's work in fragile states and urged that it continue to strengthen its operational, procedural and organizational role in these countries, in addition to fine tuning its financing arrangements to better respond to their needs. Fifth, Participants reviewed IDA's resource allocation system to ensure that resources flow to countries achiev- ing results. They also agreed to simplify the resource allocation for- mula to make it more easily understood by all stakeholders and to further enhance its transparency and effectiveness. While reaffirm- ing their support for all low-income countries, Participants urged IDA to direct more than half of its assistance to countries in Sub- Saharan Africa, if warranted by performance. 6. Organization of the IDA15 report. The report is organized in seven sections. Section I provides the backdrop against which the IDA15 discussions took place. The next three sections contain the three special themes selected by Participants at the first meeting of IDA15 discussions held in Paris in March 2007. These are: IDA's role in the global aid architecture (Section II), IDA's role in ensur- ing effectiveness of aid at the country level (Section III), and IDA's role in fragile states (Section IV). Section V contains a discussion on the management of IDA's resources. Section VI discusses financing of debt relief and arrears clearance. Section VII sets forth the recommendation of the Executive Directors to the Board of Governors to adopt the draft IDA15 Resolution (see Annex 3). SECTION I. SUPPORTING IDA COUNTRIES IN ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS A. Progress and Challenges in Achieving the Millennium Development Goals 7. Significant progress. Recent data point to encouraging signs of progress on several fronts in IDA countries. Real Gross Domestic Product (GDP) per capita grew by 5.5 percent annually between 2003 and 2006, more than twice the average growth rate of 2.2 per- cent between 1990 and 2003.This strong growth is associated with a decline in poverty, with extreme poverty falling by two percentage points between 2002 and 2004, continuing the trend since 1999. If the growth momentum of the past 15 years continues, it is likely that the global rate of extreme income poverty will be halved 229 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 230 between 1990 and 2015.4 In the human development area, some progress has been made towards the Millennium Development Goals (MDGs). In addition, other outcome indicators for public financial management and investment climate also showed positive change, with the regulatory obstacles to private sector develop- ment consistently reduced between 2003 and 2006. Progress in access to basic infrastructure was strong in all regions, and the average rate of improvement for IDA countries as a whole has sur- passed that of non-IDA developing countries,5 especially in house- hold electrification rates as well as an expansion of the telecommu- nications sector. 8. Daunting challenges remain. While IDA countries as a whole have improved outcomes in the recent past, progress varied by indicator and remained uneven across countries. Despite gains made so far, "the end of poverty is not imminent."6 While current trends suggest that the goal on halving extreme poverty by 2015 would likely be reached, it will not be met in Africa. Besides, progress towards MDGs in the human development area falls well short of what is needed to achieve many of the targets on time. Neither Africa nor South Asia is likely to meet any of the human development goals-- universal primary education, greater gender parity in education, reduced child and maternal mortality and incidence of disease, and improved water and sanitation.7 Meanwhile, recent studies show that the impact of climate change on developing countries could undermine progress towards the MDGs.8 Moreover, in an increas- ingly interdependent world, rich and poor countries alike share an increased vulnerability to shocks. Daunting challenges persist at the halfway point to 2015--the target year for reaching the MDGs. These challenges require IDA and the development community to redouble their efforts in support of growth and development in IDA countries in order to improve the lives of millions of people. 4 2006 Global Monitoring Report, page 21. 5 "Non-IDA developing countries" refer to 69 developing countries that are not eli- gible for IDA grants or credits in FY08. They are mainly middle-income, IBRD client countries. 6 The World Bank (October 2007). "Meeting the Challenges of Global Develop- ment: A Long-Term Strategic Exercise for the World Bank Group." 7 2006 Global Monitoring Report. 8 IDA at work note at http://siteresources.worldbank.org/IDA/Resources/IDA- Environment.pdf 230 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 231 B. Enhancing Aid Effectiveness to Achieve the MDGs 9. Progress supported by increased Official Development Assistance (ODA) flows. The progress made so far in IDA countries has to a large extent been the result of their own efforts, policies, and resources. In recent years, IDA countries showed gains in macroeco- nomic performance as well as in the quality of public institutions, quality of public administration, transparency, accountability and control of corruption in the public sector.9 The progress has also been supported by increased ODA flows. In Monterrey in 2002, the international community pledged to support the efforts of develop- ing countries in achieving internationally agreed development goals, including the MDGs. Since that time, ODA--the main form of resource transfers to IDA countries--has been steadily rising. ODA reached its highest level in 2005 at USD 106.8 billion, boosted in large part by debt relief operations. This rising trend was reversed slightly in 2006, with ODA falling to USD 103.9 billion at current prices.10 Preliminary estimates suggest that ODA may fall further in 2007, as the debt relief amounts taper off. For low-income countries to achieve the MDGs, ODA needs to resume its growing trend and donors will, therefore, need to scale up aid in the coming years in accordance with their international commitments. 10. The way aid is delivered is critical. While aid volumes are impor- tant, the way in which aid is delivered also matters. Recent trends in ODA and in the global aid architecture pose challenges to the effectiveness of aid at the country level. Some of these challenges include: ˇ A decline in aid for core development programs. Overall ODA has increased (growing on average 11.4 percent per year during 2001­05) and of that, debt relief has been a critical component growing by 70 percent between 2004 and 2005. However, ODA for core development programs11 has not grown as quickly 9 World Bank (2007). "Country-Based Scaling-up: Assessment of Progress and Agenda for Action." Paper prepared for the Development Committee meeting, October 21, 2007. 10In 2006, ODA at 2005 prices and exchange rates reached USD 101.3 billion, resulting in a real decline of 5.1 percent over the previous year. 11ODA for core development programs is defined as total ODA excluding selected special-purpose grants such as debt relief, administrative costs of donors, and emer- gency assistance. See IDA (2007). "Aid Architecture: An Overview of the Main Trends in Official Development Assistance Flows." 231 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 232 (4.6 percent per year over the same period), particularly in IDA- eligible countries, which received less than they did on average during the early 1990s. ˇ A shift from infrastructure to social sectors. Over the last two decades, a rising share of social sectors in total sector-allocable ODA to low-income countries (from 29 percent in the early 1990s to 52 percent between 2001 and 2004)12 was accompanied by a declining share of infrastructure and production (from 59 percent to 38 percent over the same period). The decline in infrastructure is particularly noticeable in Sub-Saharan Africa. ˇ An increasingly complex aid architecture. The global aid architec- ture has become complex, with: (i) a proliferation of donor chan- nels providing ODA; (ii) fragmentation of ODA flows through an increasing number of donor-funded activities with decreasing financial size; and (iii) a significant degree of earmarking of aid resources for specific uses or for special-purpose organizations, including through the increasing number and size of global pro- grams or "vertical funds."13 The growing importance of non- DAC and "emerging" donors has also changed the global aid architecture significantly in recent years. 11. While the new sources of aid bring much-needed resources to help developing countries reach their MDGs, the accompanying fragmen- tation and proliferation of aid reduces its effectiveness by:14 (i) pre- senting additional challenges to harmonizing and aligning aid, which results in rising transaction costs for recipient countries and donors; (ii) potentially creating wasteful duplication and overlap in the deliv- ery of aid; (iii) causing competition for scarce skills in recipient coun- tries; and (iv) distorting sectoral allocations of public spending by possibly reflecting global rather than recipients' priorities as aid flows become increasingly earmarked for specific purposes. 12. The country-based development model. These trends in ODA and the global aid architecture highlight the need for a country-based development model as the means to make effective use of scaled- up ODA at the country level--a view reflected in the Paris Decla- ration on Aid Effectiveness. The country-based model provides a 12Social sectors, in the OECD/DAC classification, include education; health and population; water and sanitation; government and civil society; and conflict, peace and security. 13IDA (2007). "Aid Architecture: An Overview of the Main Trends in Official Development Assistance Flows." 14Ibid. 232 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 233 platform upon which different ways of delivering aid--traditional bilateral and multilateral ODA, emerging non-DAC donors, and vertical funds for global public goods--can work together in an integrated manner under the leadership of recipient countries to achieve results at the country level. 13. The introduction of the Poverty Reduction Strategy (PRS) approach in 1999 was an important step in the evolution of the country-based model which put recipient country governments in the driver's seat, brought a clearer focus on poverty reduction, emphasized national ownership of the development effort, and created accountability for development results. If aid-delivery mechanisms and approaches are framed in the context of national development strategies, their goals would be mutually reinforcing, making it possible to achieve much needed balance and complementarity. C. IDA's Support for MDGs through the Country-Based Model 14. IDA and the country-based model. Alignment with the PRS is the cornerstone of IDA's support to the country-based model and the Country Assistance Strategy (CAS) provides an anchor for IDA's support at the country level. Thus, IDA effectively has a strategy for assisting each country--a CAS or Interim Strategy Note (ISN)--which evolves over time to adapt to countries' evolving challenges and priorities. The CAS facilitates alignment with coun- try priorities by taking into account national development pro- grams as well as harmonization with other donor and World Bank Group activities, thereby maximizing impact on the ground. The CAS also makes it possible for IDA's program to reconcile global concerns and national priorities at the country level. Increasingly, the formulation of IDA's country strategies in support of the PRS is expected to occur through its participation in joint assistance strategies with other donors. Finally, IDA provides support for the strengthening of national capacities, including those for environ- mental and social safeguards, as well as public financial manage- ment and procurement. 15. Financing volumes, quality and results. Within the country-based model, IDA has the capacity to provide financial assistance on a large scale to countries that continue to rely on ODA as the main form of external financing. The scale of IDA's financial assistance, underpinned by its strong focus on quality, is central to the achieve- ment of the MDGs. Assessments by the Independent Evaluation Group (IEG) show a continuous improvement of the impact of the 233 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 234 World Bank's operations measured in terms of project outcomes, sustainability, and contribution to institutional development.15 Going forward, inputs from IEG assessments can be expected to inform improvements in IDA operations. D. Broad Strategic Directions for IDA Going Forward 16. Way forward. In parallel with the IDA15 replenishment discus- sions, the World Bank Group is discussing its way forward in cat- alyzing "inclusive and sustainable globalization," fostering shared growth with care for the environment, and improving the living standards of people with the overall aim of reducing global poverty. The broad framework for the World Bank Group's strat- egy was spelt out by President Zoellick in his note to the Develop- ment Committee16 and captured in his discussions with Participants during the meeting held in Washington, D.C. in October 2007. The President's vision for the World Bank Group rests on the ongoing Long Term Strategic Exercise (LTSE), which provides some of the building blocks for the long-term strategy.17 The LTSE paper points out that in order for economic growth to assist in poverty reduction, it has to be both inclusive and sustainable. 17. Relevant themes for IDA. Four of the six strategic themes high- lighted by the President resonate particularly well with the topics discussed by Participants in the IDA15 discussions. These are: (i) "helping to overcome poverty and spur sustainable growth in the poorest countries, especially in Africa;" (ii) "addressing the spe- cial challenges of states coming out of conflict or seeking to avoid breakdown of the state;" (iii) "playing a more active role with regional and global public goods on issues crossing national bor- ders, including climate change, HIV/AIDS, malaria, and aid for trade;" and (iv) "fostering a knowledge and learning agenda across the World Bank Group to support its role as a brain trust of applied experience." 18. Broad strategic directions. The LTSE reaffirms the importance of the two-pillar framework that has underpinned the World Bank Group's--and IDA's--work over the last few years to reduce global 15IDA (2007). "The Role of IDA in the Global Aid Architecture: Supporting the Country-Based Development Model," page 16. 16World Bank (October, 2007). "Note from the President to the World Bank." DC2001-0025. 17The World Bank (2007). Op. cit. 234 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 235 poverty. Within the country-based model, the first pillar focuses on building a strong climate for investment, jobs, and sustainable growth and the second pillar on empowering the poor to encourage their participation in development. Equity and inclusion are central to the success of the two-pillar framework as they influence the workings of both the investment climate and the empowerment of the poor.18 The LTSE also notes that two additional perspectives need to be weaved into the two-pillar framework: institutions and governance processes (particularly in fragile states) as well as global public goods, including environmental sustainability. Consistent with this approach, IDA's focus on the two-pillar framework will be complemented by several cross-cutting issues such as improving governance, fostering gender equality, and addressing global chal- lenges, including issues such as climate change. 19. Private sector-led growth, agriculture, and infrastructure invest- ments. Policies for sustained, broad-based economic growth are important for a sound poverty reduction strategy. In turn, growth can only be sustained in the long run if it is underpinned by a vig- orous, thriving private sector.19 A healthy investment climate is a crucial element in any strategy focusing on promoting sustained growth and poverty reduction. Government policies and behaviors are important for a sound investment climate, as they can deci- sively influence "the security of property rights approaches to regu- lation and taxation (both at and within the border), the provision of infrastructure, the functioning of finance and labor markets, and broader governance features such as corruption."20 20. IDA supports private sector-led growth through its financial assis- tance and non-lending activities. IDA's work on private sector development is complemented and enhanced through IFC's and Multilateral Investment Guarantee Agency (MIGA)'s private sec- tor investment activities. IDA collaborates with IFC in many IDA countries, and will intensify this collaboration through: joint work on investment climate, including removing barriers for female entrepreneurs; joint approaches to public private partnerships; and 18The World Bank (2005). "World Development Report 2006: Equity and Development." 19World Bank (2002). "Private Sector Development Strategy: Directions for the World Bank Group." 20World Bank (September, 2004). "World Development Report 2005: A Better Investment Climate for Everyone," page 1. 235 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 236 joint work on Micro, Small and Medium Enterprises (MSME) sup- port, particularly in Africa. In addition, IDA and IFC will continue to develop innovative approaches, including the use of the promis- ing Output-Based Aid (OBA) projects in IDA countries, to harness private sector activity to meet development goals. 21. In IDA countries, agriculture often accounts for a large share of GDP and employment. Therefore, growth in agricultural incomes is essential to stimulate broad-based growth in the overall economy, reduce poverty and ensure food security.At the same time, as noted in the 2008 World Development Report, the Doha Round of trade negotiations need to be urgently concluded, to help pave the way for increased exports from low-income countries, especially in agri- culture. Given the diverse constraints to agricultural development, especially in Sub-Saharan Africa and South Asia, interventions have to be multifaceted and coordinated across a range of activities. IDA has an important role in agriculture for improving economic com- petitiveness and ensuring equitable distribution of benefits. Going forward, in accordance with the findings of the 2008 World Devel- opment Report and the recommendations of a recent IEG report,21 IDA will renew its focus on the agricultural sector. 22. Infrastructure services contribute to poverty reduction and private sector-led economic growth by lowering costs and expanding market opportunities, thereby increasing productivity and improving the business environment. However, considerable gaps remain in access to infrastructure services. In the developing world, it is estimated that 1.1 billion people are without safe water, 1.6 billion are without electricity, 2.4 billion without sanitation, and more than 1 billion without access to an all-weather road or telephone services.22 The gap in access reflects, in part, a large shortfall in infrastructure investment. Closing the infrastructure access and investment gaps is a necessary step to achieve development results and to meet the MDGs, including those for human development (e.g., education, health, empowerment of women and other marginalized groups). 21IEG (2007). "Agriculture in Sub-Saharan Africa: An IEG Review." The report found that the agricultural sector has been neglected both by governments and the donor community, including the World Bank. It finds that the Bank's limited and, until recently, declining support has been largely piecemeal and "sprinkled" across several critical areas such as research, extension, credit, seeds, roads, and policy reforms, but with little recognition of the synergy between them. 22IDA at Work Background Note "Role of IDA in Infrastructure," May, 2007, page 3. 236 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 237 23. There is a strong case for scaling up IDA's support to infrastructure to help close the infrastructure investment gap. IDA remains the largest multilateral source of physical infrastructure financing and has recognized expertise in this field. IDA's financial support for infrastructure services, combined with policy dialogue and institu- tional capacity building would, where appropriate, also help crowd- in private sector financing to ensure a sustainable, private-sector-led growth in IDA countries. 24. Scaled-up IDA support to infrastructure will continue to be com- plemented by measures to increase the productivity of infrastruc- ture spending as well as by policies and institutional arrangements that foster financial, environmental, and social sustainability. Over the past decade, environmental and social sustainability has become central to IDA's development assistance. This has been accompanied by tighter fiduciary controls to deter corrupt prac- tices and misuse of funds. Furthermore, scaling-up cannot be suc- cessful without responsiveness to local needs: IDA's strategy on infrastructure is centered on the need to combine scaling-up infra- structure projects with targeted service delivery to the poor.23 25. Investing in people. To lay the foundations for sustained growth, IDA invests in people by improving the quality and extending the reach of social services to the poor. ˇ IDA's Health, Nutrition and Population (HNP) strategy24 aims to support countries in their efforts to improve the health conditions of the poor and the vulnerable and prevent the poor from becom- ing destitute as a result of illness.The objectives of the strategy are to: improve the level and distribution of key HNP outcomes, out- puts, and system performance to improve living conditions, partic- ularly for the poor; strengthen financial protection to prevent des- titution due to illness; enhance financial sustainability; and improve governance, accountability and transparency. The HNP strategy also reaffirms a commitment to population issues, includ- ing reproductive health as well as maternal and child health policy, based on IDA's comparative advantage, and working in collabora- tion with the United Nations Population Fund (UNFP) and the World Health Organization (WHO). In view of the changes in the 23IDA at Work Background Note "Role of IDA in Infrastructure" op.cit, pages 21­25. 24World Bank (2007). "Healthy Development: The World Bank Strategy for Health, Nutrition, and Population Results." 237 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 238 architecture for development assistance for health, IDA will sup- port country efforts by: renewing focus on results; strengthening client country efforts to have well-organized and sustainable health systems; ensuring synergy between health system strength- ening and priority disease interventions;25 advising client countries on an intersectoral approach to HNP results; and increasing selec- tivity, improving strategic engagement, and agreeing with global partners on division of labor to achieve results at the country level. ˇ IDA's education sector strategy focuses on achieving basic educa- tion for all while focusing on the poorest children and girls to ensure gender parity, early childhood interventions, innovative delivery and systemic reform.26 An update of the strategy in 2005 takes into account changes in the international aid architecture, including the Education for All Fast Track Initiative; focuses on education-labor market linkages; places greater emphasis on the quality of education and learning outcomes; recognizes the impact of HIV/AIDS on education; accounts for learning gaps across and within countries; addresses greater demand for sec- ondary education; and considers the role of tertiary education and lifelong learning in promoting knowledge-driven economic growth. To maximize the impact of education on growth and poverty alleviation, IDA emphasizes three themes: integrating education in a country-wide perspective; broadening the strategic agenda through a system-wide approach; and becoming more results oriented. These themes ensure that education is looked at within the context of overall development strategies and in spe- cific macroeconomic and sectoral contexts. ˇ Social protection and labor policies contribute to human devel- opment by managing the income and welfare risks that affect vulnerable groups. IDA's broad policy objectives27 are to: improve earning opportunities and the quality of jobs; improve security for households and communities through better man- agement of risks; and provide assistance for vulnerable groups to improve equity and reduce extreme poverty. In support of these objectives, IDA focuses on labor markets (including eliminating 25IDA (2007). "The Role of IDA in the Global Aid Architecture: Supporting the Country-Based Development Model." 26World Bank (1999). "Education Sector Strategy," and World Bank (2005). "Edu- cation Sector Strategy Update: Achieving Education for All, Broadening our Per- spective, Maximizing our Effectiveness." 27World Bank (August, 2000). "Social Protection Strategy: From Safety Net to Springboard." R2000-1060. 238 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 239 harmful child labor, promoting gender equity, and advancing other internationally agreed workers' rights) and job creation; expanding pensions and old-age income support; strengthening social safety nets; using social funds as community-based mecha- nisms to improve access to social services for the poor and other vulnerable groups; and encouraging governments to integrate disabled people into their poverty alleviation efforts. Going for- ward, to pursue its work on social protection, IDA will strengthen cross-sectoral activities, better integrate knowledge- management activities and incorporate poverty and social impact analysis into policy development.28 26. Cross-cutting themes. IDA will focus on several themes that com- plement and cut across the twin pillars of growth and empowering the poor.These include: ˇ Governance: In the mutual accountability framework agreed upon in the Monterrey Consensus, good governance plays a major role because it is important for the development perform- ance of a country.29 The World Bank Group's recently approved governance and anticorruption strategy30 is results oriented and aims at helping developing countries identify their priorities for improving governance and articulate and implement programs responding to those priorities in a manner that is sustainable in the long run. The governance strategy would be implemented at the country, project and global levels to enhance and integrate governance and anti-corruption measures. At the country level, the focus would remain on strengthening state capacity and accountability (through improving public financial management of revenues and expenditures, procurement, auditing, the judici- ary, and legal reforms, as well as cross-cutting civil service and transparency reforms), expanding private sector reforms, and engaging systematically with a broad range of stakeholders. At the project level, the focus will be on actions to mitigate fiduciary risks (through strengthening country systems, tailoring projects to manage specific sectoral risks, mitigating risks upstream on high-risk projects, etc). At the global level, the World Bank will support harmonized approaches with other international actors. In this regard, the Stolen Asset Recovery Initiative is an integral 28OPCDM (December, 2007). "Sector Strategy Implementation Update FY06." 29Swaroop, V. and S. Rajakumar (2002). "Public Spending and Outcomes: Does Governance Matter?" World Bank Policy Research Working paper No. 2840. 30World Bank (2007). "Strengthening World Bank Group Engagement on Gover- nance and Anticorruption." 239 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 240 part of the World Bank's governance strategy and helps develop- ing countries recover stolen assets.31 The Governance and Anti- corruption strategy is being further elaborated to strike a bal- ance between short-term signaling in cases of fraud or corruption and the longer-term efforts to build capacity. ˇ Gender: Empowerment of women is essential for achieving MDGs and promoting shared economic growth. The World Bank's Gender Action Plan32 recognizes that expanding eco- nomic opportunities for women is "smart economics" and notes that their increased participation in the labor force and associ- ated increased earnings lead to reduced poverty and faster growth. The Gender Action Plan targets women's empowerment in economic sectors, mostly infrastructure, agriculture, private sector development and finance.The way ahead includes: intensi- fying gender mainstreaming in World Bank and IFC operations and in economic and sector work; mobilizing resources to imple- ment and scale up initiatives that empower women economi- cally; improving knowledge and statistics on women's economic participation and relationship between gender equality, growth and poverty reduction; and undertaking targeted communication campaigns to foster partnerships on the importance of women's economic contributions. A status report on the Gender Action Plan will be discussed at the IDA15 Mid-Term Review. ˇ Climate change: The impact of climate change is expected to become more severe for developing countries, putting the achievement of the MDGs at risk. IDA's response to the chal- lenge of climate change has been developed as part of the World Bank's Clean Energy Investment Framework (CEIF).33 Its main elements are: (i) improving access to clean energy; (ii) support- ing low carbon development in a manner that improves global progress towards carbon emission reduction; and (iii) supporting adaptation to climate change. IDA is able to link global issues with country strategies and to invest in global public goods at the country level. As such, IDA's project selection and design deci- sions will be guided, among other things, by changing climatic circumstances in each country.34 31http://siteresources.worldbank.org/NEWS/Resources/Star-rep-full.pdf 32The World Bank (2006). "Gender Equality as Smart Economics: A World Bank Group Gender Action Plan (Fiscal Years 2007­10)." 33World Bank (2007). "Clean Energy for Development Investment Framework: The World Bank Group Action Plan." DC2007-0002. 34For details, see IDA (2007). "The Role of IDA in the Global Aid Architecture: Supporting the Country-Based Development Model." 240 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 241 E. Key Developments since the IDA14 Replenishment Discussions 27. The Multilateral Debt Relief Initiative (MDRI). The MDRI was proposed in June 2005 and its implementation began on July 1, 200635 after its approval by IDA's Executive Directors and Board of Governors.36 Under the MDRI, 100 percent of eligible debts to IDA, the African Development Fund (AfDF), and the Interna- tional Monetary Fund (IMF) were cancelled for countries that reach completion point under the Heavily Indebted Poor Coun- tries (HIPC) Initiative. The MDRI aims to: deepen debt relief to HIPCs while safeguarding the long-term financial capacity of IDA and AfDF; and encourage the best use of additional donor resources for development by allocating them to low-income coun- tries on the basis of performance. Debt relief through HIPC and MDRI has helped lower debt and debt service ratios in many coun- tries, allowing them to increase poverty-reducing expenditures. To ensure that the financing cost of the MDRI does not compromise IDA's financial strength and capacity to support low-income coun- tries in the medium to long term, donors agreed to finance IDA's MDRI costs on a "dollar-for-dollar" basis. 28. The Non-Concessional Borrowing Policy (NCBP). The provision of debt relief and grants increases borrowing space for low-income countries, which presents both opportunities and challenges. If bor- rowing and lending take place at a pace inconsistent with countries' debt-carrying capacity, it will contribute to the risk of unsustainable debt burdens accumulating within a few years. In response to these risks, IDA's NCBP was approved by the Board of Executive Direc- tors in July 2006.37 The NCBP rests on two pillars: enhancing credi- tor coordination around the Debt Sustainability Framework (DSF) and discouraging unwarranted non-concessional borrowing through disincentives (also see Section II B). 29. Key policy decisions and discussions at the IDA14 Mid-Term Review. At the IDA14 Mid-Term Review, IDA's policy framework 35IDA (March, 2006). "IDA's Implementation of the Multilateral Debt Relief Initia- tive." IDA/R2006-0042. 36IDA (2006). "Additions to Resources: Financing the Multilateral Debt Relief Ini- tiative." Resolution No. 211 adopted on April 21, 2006. 37IDA (2006). "IDA Countries and Non-Concessional Debt: Dealing with the Free- Rider Problem in IDA14 Grant-Recipient and Post-MDRI Countries." 241 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 242 was further strengthened through discussions on several key topics. These include discussions on: ˇ The continued use of joint Bank-Fund Debt Sustainability Framework (DSF) as the analytical foundation for IDA's grant eligibility system and the confirmation that IDA's financing terms for IDA-only countries38 would be based on Bank-Fund debt sustainability analyses (DSAs) going forward. ˇ A framework for assessing the readiness of countries to make productive use of development policy operations (DPOs). There was broad support for the framework that is embedded in the current policy and it was agreed that the use of DPOs will be based on country-level assessment of benefits and risks. There was also broad agreement for the continuation of the arrange- ments stipulated in the IDA14 report39 and for the Executive Directors to be informed through the annual Medium-Term Strategy and Finance paper of the past DPO share for IBRD and IDA and the outlook for future years. ˇ The role of governance in IDA's Performance-Based Allocation (PBA) system,40 the regional project program pilot,41 progress on the implementation of IDA's Results Measurement System,42 and IDA's work in developing the private sector through the Africa Region MSME program43 and the OBA projects.44 30. Ongoing reforms. IDA also began an important process of reform- ing and modernizing its operational policies to improve its opera- tional effectiveness. Key reforms adopted in the past few years include: ˇ The new policy on Additional Financing, adopted in May 2005, which permits IDA to scale up successful operations with greater speed and efficiency to enhance the results on the ground. 38Countries with per capita income below IDA operational cut-off and no access to IBRD resources. 39If the projected share of DPO commitments by IDA exceeds 30 percent for any future year, it was agreed that Management would seek additional guidance from IDA's Executive Directors. 40IDA (2006). "IDA's Performance-Based Allocation System: A Review of the Governance Factor." 41IDA (2006). "IDA14 Mid-Term Review of the IDA Pilot Program for Regional Projects." 42IDA (2006). "IDA14 Results Measurement System: A Mid-Term Review Report." 43IDA (2006). "A Review of the Joint IDA-IFC Micro, Small and Medium Enter- prise Pilot Program for Africa." 44IDA (2006). "A Review of the Use of Output-Based Aid Approaches." 242 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 243 ˇ The new policy on Rapid Response to Crises and Emergencies, adopted in February 2007. ˇ As part of implementation of the new Rapid Response policy and of IDA's overall effort to improve the effectiveness of its response to fragile states in particular, IDA also adopted organi- zational and staffing changes relating to its work in fragile states, designed to enhance IDA's local presence and help attract quali- fied staff to work in fragile states. In addition, the Multilateral Development Banks have agreed on a shared approach to iden- tification of fragile situations and more importantly, to protocols governing how to decide the division of labor at the country level according to comparative advantages of each institution and to explore recruitment methods for local staff that limit dis- tortions to local labor markets. ˇ IDA has also commenced an important reform of consolidating and modernizing policies governing investment lending, so as to improve effectiveness, efficiency and responsiveness of this key lending instrument. It is aimed at creating a single principles- based umbrella policy for investment lending. 31. Transparency and accountability in IDA. Finally, IDA aims to meet the highest standards of transparency in its operations, poli- cies and publications, and recognizes its responsibility for making wide-ranging information available to IDA countries and the inter- national development community. To enhance accountability and ownership, IDA will strengthen its contacts in recipient countries with parliaments and Civil Society Organizations as well as con- tinue to work through international organizations such as the Par- liamentary Network on the World Bank. IDA has taken several steps in recent years to increase its openness, transparency and accountability and will continue its leadership in this area by taking additional steps during IDA15, including through: ˇ IDA replenishment discussions: IDA replenishment discussions continue to be open and transparent, with representatives from borrowing countries taking part in them. In addition, consulta- tions are held with regional stakeholders during the replenish- ment meetings to solicit their views on challenges confronting IDA countries and their development partners.45 Moreover, all relevant policy papers discussed at the replenishment meetings are posted on the external web before they are discussed with 45During the second IDA15 meeting held in Maputo in June, 2007, participants had discussions with opinion leaders from African countries. 243 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 244 the Participants; comments are sought from Civil Society Orga- nizations on the draft Deputies' report; and the Chairman's sum- maries of the discussions are posted on the web following the meeting. ˇ Country Performance Assessments: To enhance transparency of its resource flows, IDA will continue to publicly disclose the per- formance assessments on which they are based. Specifically, IDA will continue to post the Country Policy and Institutional Assess- ment (CPIA) ratings on its external website. In addition, IDA Country Performance Ratings and their components will also continue to be disclosed. During IDA15, IDA aims to make fur- ther efforts to enhance transparency. As part of these efforts, IDA plans to publicly disclose the Post-Conflict Performance Indicators (PCPIs) during IDA15 after review by an external panel, whose findings will also be posted on IDA's external web- site. Finally, IDA plans to make allocations and commitments available to IDA's Executive Directors for information at the end of each fiscal year, so that they can be tracked. ˇ Financial flows from extractive industries: IDA aims to continue commitments made during the IDA14 replenishment discussions to enhance transparency of revenue flows to governments from extractive industry projects. IDA's financial assistance to a proj- ect with significant impact on revenues would continue to be predicated upon the government having in place, or being in the process of establishing a system for accounting for revenues and their use. The government should also have in place, or be in the process of establishing a system of independent auditing of such revenue receipts and the public dissemination of results. IDA aims to continue monitoring the implementation of these sys- tems and take appropriate actions if they are not implemented. ˇ Disclosure: To broaden the understanding of development issues, stimulate debate and create public support, IDA seeks to con- tinue sharing information on IDA policies and operations. IDA makes available project, policy, strategy and evaluation docu- ments to the public on its external website, including information on the implementation or execution status of projects and pro- grams it supports.46 During the IDA15 period, an overall review 46 On March 8, 2005, the Board approved a number of revisions to the Bank's policy on the disclosure of information (http://www1.worldbank.org/operations/disclosure/) to reaffirm the Bank's commitment to ensuring increased transparency about its activ- ities (also see "World Bank Disclosure Policy: Additional Issues--Follow-up Consol- idated Report" (Revised), February 14, 2005, for details). 244 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 245 of the disclosure policy will be carried out by Management, including progress made in implementing the 2005 revisions. The World Bank aims to continue its efforts to disseminate informa- tion and its research, including through strengthening Public Information Centers around the world. In addition, following approval of disclosure by the Executive Directors, Management intends to publicly disclose the results of the independent com- prehensive assessment of IDA's controls framework, scheduled for completion in early Calendar Year 2008. In addition, Man- agement aims to implement the findings of this report, and pro- vide at the IDA15 Mid-Term review, an update on progress made in this regard, including outlining a process for the periodic review of IDA's controls. 32. Against the backdrop for the report provided in this section, the following sections summarize agreements reached during the IDA15 replenishment meetings on a series of operational, policy and financial recommendations to reinforce the effectiveness of IDA in all low-income countries, with special focus on Sub-Saharan Africa. Sections II­IV summarize discussions on the three special themes picked by Participants for the IDA15 replenishment discus- sions. The policy papers on which these sections are based are listed in Annex 4 of this report. SECTION II. THE ROLE OF IDA IN THE GLOBAL AID ARCHITECTURE 33. Participants examined the role of IDA in an increasingly complex aid architecture as the first special theme of the IDA15 replenish- ment discussions. They reiterated that the challenges associated with donor proliferation and aid fragmentation reinforce the importance of anchoring aid delivery in a country-based develop- ment model aligned with national development strategies to make it more effective. Along with these challenges to aid effectiveness, Participants also focused on IDA's role in emerging regional and global issues, which include the spread of HIV/AIDS and other health concerns, and the preservation of global environmental commons. Finally, going beyond debt relief, Participants looked at IDA's role in ensuring that recipient countries adopt prudent debt management strategies. 245 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 246 A. IDA's Role at the Country, Regional and Global Levels 34. On average since the 1970s, around 70 percent of overall ODA is provided through bilateral channels and 30 percent through multi- lateral channels. This ODA has been provided by a growing num- ber of donors in recent times, with around 56 bilateral donors and more than 230 multilateral organizations, funds and programs.47 With so many channels available for donors to provide aid, Partici- pants discussed how to make IDA a distinctive channel for deliver- ing aid in order to achieve results at the country level. 35. IDA's dual role. Participants were of the opinion that IDA's role in supporting the country-based model has become more important in a complex aid architecture, and urged Management to significantly step up its efforts to meet this challenge. IDA's potential to play this role stems from its strengths which include its country level knowl- edge; multi-sectoral approach to development; ability to draw on global experience; analytical and research capabilities; and its deliv- ery of large volumes of development finance underpinned by a strong focus on quality and results. Participants noted that these strengths enable IDA to tailor its assistance to different country cir- cumstances; help ensure coherence between macroeconomic stabil- ity and long-term development goals through cooperation with the IMF; act as a "first mover" to tackle critical development challenges and introduce policy innovations; leverage funds from other sources of aid; and exercise its convening power when needed to help coor- dinate development assistance efforts at the country level. As such, Participants delineated the dual role of IDA in: ˇ Providing direct financing and knowledge services to client countries in support of their priorities and needs; and ˇ Providing a platform which helps other development partners operate effectively to achieve results at the country level. 36. Selectivity. Despite its importance in offsetting adverse effects of donor proliferation, aid fragmentation and earmarking, and its wide-ranging development expertise, Participants emphasized that IDA must become more willing to let others play the leading role among donors in every sector or country. In particular, they stressed that the determination of when IDA should lead, when it 47IDA (2007). "The Role of IDA in the Global Aid Architecture: Supporting the Country-Based Development Model." 246 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 247 should follow, or not be involved, must be made at the country level in consultation with country authorities and other donors. Depending on country-specific circumstances, other key donors and organizations, such as the regional development banks, the European Commission or UN agencies, would be better suited to provide leadership, especially in fragile or post-conflict situations. In this regard, consistent with the country-based model, Partici- pants pointed out that the composition of IDA assistance should be decided in the context of CASs and joint assistance strategies. They stressed that the CAS process helps IDA achieve selectivity at the country level, resulting in country-appropriate choice of interventions and assistance both within and across sectors, and asked that this focus on selectivity be strengthened going forward. 37. Support to regional and global programs and priorities. Partici- pants recognized that IDA's strengths at the country level allow it to also play a pivotal role in addressing regional and global issues. They pointed out that IDA supports the global public goods agenda by mainstreaming and integrating global programs into national development strategies, and by investing directly in global commons at the country level. They noted that, over the years, IDA has played these roles with regard to protection of environmental commons, communicable diseases, reforms in the international trade system, production and dissemination of global development knowledge, and the fostering of global financial stability. Partici- pants pointed out that IDA should draw on its analytical knowl- edge, ability to design complex regional projects, and capacity to forge consensus to foster regional integration. They stressed that there is a strong demand for IDA's regional projects, particularly in Sub-Saharan Africa, and noted that this demand is expected to remain strong during IDA15. Participants expected the geographic coverage of regional projects to evolve in line with demand. Finally, they underscored the importance of continuing coordina- tion with other partners, particularly regional development banks. 38. Areas for improvement. Despite progress so far, to respond effec- tively to emerging challenges in the global aid architecture in a manner consistent with its core mandate and comparative advan- tage, Participants urged IDA to intensify its efforts in four main areas: (i) strengthening complementarity with vertical approaches to aid delivery; (ii) ensuring appropriate sectoral funding; (iii) addressing the challenge of climate change; and (iv) enhancing alignment and harmonization. 247 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 248 39. Strengthening complementarity with vertical approaches to aid delivery. Participants emphasized the need for balance and comple- mentarity between vertical and horizontal aid.48 They noted that, while global programs have brought much-needed attention to their respective focus areas, they entail risks, including: (i) reduced impact on the ground in light of recipient counties' limited capacity to absorb large volumes of earmarked funding; (ii) insufficient intra- and inter-sectoral coordination at the country level; (iii) pro- liferation of separate financing mechanisms; and (iv) medium-term fiscal sustainability risks. Participants pointed out that IDA can support the integration of horizontal and vertical aid by providing a `horizontal platform' upon which the vertical funds as well as other sources of aid can operate effectively and mitigate the risks associated with vertical aid. Participants underscored that the long- term effectiveness of aid channeled through vertical programs depends on fiscal sustainability, a supportive policy environment-- including policy measures in related sectors--and broader capacity building measures. They stressed that IDA should play an impor- tant role in identifying and supporting such policies. Participants noted that, going forward, CASs, sectoral strategies and country analytical work would need to pay more attention to the interplay between vertical funds and the country-based model. It was noted that IDA already plays an important role in strengthening national capacities, including with respect to environmental and social safe- guards, which can be of use to other donors for providing develop- ment assistance. 40. Ensuring appropriate sectoral funding. Participants stressed the importance of taking into account overall ODA--not just IDA-- flows going to each sector when deciding on the sectoral composi- tion of assistance in the CAS. Participants underscored the need for sufficient funding for infrastructure, both at the national and the regional levels to close the infrastructure access and investment gaps. They further noted that, while overall ODA for the social sec- tors has gone up, a significant part of this increase--particularly for health--is provided through vertical funds. Despite the increase in overall ODA to social sectors, Participants concluded that there is room for enhanced involvement by IDA in these sectors in ways that draw on IDA's sectoral comparative advantages, and provide 48Vertical funds can be defined as partnerships and related initiatives that focus "vertically" on specific issues or themes. 248 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 249 additional volumes that reinforce complementarity and balance. In this context, in the health sector, they agreed with the recent World Bank strategy for Health, Nutrition, and Population,49 which emphasizes IDA's core sectoral comparative advantage in health system strengthening. 41. Addressing the challenge of climate change. Low-income countries are likely to suffer the most from the impact of climate change because of their location, low incomes, and low institutional capac- ity, as well as their greater reliance on climate-sensitive sectors like agriculture. Participants noted that climate change has gained impetus and urgency as a development issue and that IDA's work in this area should be consistent with its core mandate of poverty reduction and economic growth. In this context, they agreed that in view of the multi-sectoral nature of the challenges posed by cli- mate change, IDA is an appropriate platform to mainstream cli- mate actions into country strategies. Participants affirmed that the priority in IDA countries would be adaptation efforts to adjust to ongoing and potential socio-economic effects of climate change, complemented by selective mitigation actions such as expanding access to clean energy, including renewable energy, and improved forest and land management programs. 42. Participants welcomed the proposal to scale up climate actions dur- ing IDA15. In this regard, they supported the planned expansion of analytical work, mainstreaming of climate actions in CASs, integra- tion of adaptation actions in IDA investments, scaling up disaster preparedness, leveraging financing options to increase access to new technology, and catalyzing access to innovative private-sector insur- ance products such as weather derivatives in IDA countries. In order to enable IDA to catalyze access to such products, the draft resolution of the Board of Governors contains specific authority for these activities.50 While they noted that IDA will need additional resources for such scaling up, they stressed that the focus on climate actions should not lead to any earmarking of funds. 49World Bank (2007). "Healthy Development. The World Bank Strategy for Health, Nutrition, and Population Results." 50Article V, Section 2(a) of IDA's Articles of Agreement requires IDA to provide financing in the form of loans. IDA may however provide other forms of financing out of funds from subsequent replenishments where the replenishment authorization specifically allows such other method of financing (as for grants and guarantees). 249 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 250 43. Finally, Participants asked Management to continue coordinating climate actions with other development partners, especially the Global Environment Facility (GEF). They underlined the need to clarify the respective roles of IDA and GEF in climate change. Par- ticipants requested Management to provide a progress report on climate change actions at the IDA15 Mid-Term Review. 44. Enhancing alignment and harmonization. Participants stressed the need for IDA to continue to strengthen its focus on harmonization and alignment, as a key element of its efforts to further enhance country level effectiveness. See Section III C for details. 45. A strong replenishment. To enable IDA to play the platform role expected of it in the common efforts towards the MDGs, Partici- pants underscored the need for a "critical mass" of funding through a strong replenishment for IDA. They pointed out that the volume of financial assistance by IDA ultimately enhances its ability to effectively deploy its strengths at the country level. B. IDA's Role in Ensuring Debt Sustainability 46. Going beyond debt relief. Participants recognized IDA's role in improving debt sustainability prospects in client countries, which went beyond the provision of debt relief under the HIPC Initiative and the MDRI. First, IDA plays a key role in helping ensure debt sustainability through its support of growth-promoting policies. Sec- ond, the World Bank, jointly with the IMF, developed and imple- mented the debt sustainability framework (DSF) for low-income countries and has produced forward-looking debt sustainability analyses (DSAs). Third, IDA operationalized the DSF by linking grant eligibility for IDA-only countries to debt distress risk ratings emerging from the DSAs. Fourth, IDA implemented the non-con- cessional borrowing policy (NCBP) to help grant and MDRI-eligi- ble IDA countries avoid a rapid re-accumulation of debt. Fifth, the World Bank and the IMF continued creditor outreach activities to increase the effectiveness of the DSF. Finally, the World Bank, together with the IMF, enhanced efforts toward capacity building for stronger debt management in low-income countries. 47. Continue to strengthen the DSF. Participants noted the transition of the DSF to a more mature phase of implementation. They wel- comed the gradual improvement in the quality and analytical rigor in forward-looking DSAs. Going forward, Participants encouraged IDA to continue strengthening the application of the DSF by: 250 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 251 (i) conducting a more systematic analysis of total public debt, including domestic debt; (ii) scrutinizing the underlying macroeco- nomic assumptions more carefully; (iii) paying more attention to the precautionary features of the DSF, such as retrospective analy- sis of departures from the assumptions of previous DSAs; (iv) increasing use of customized stress tests; and (v) providing guidance on the appropriate pace of new borrowing in countries with debt-burden indicators well below the debt-burden thresh- olds. Finally, some Participants noted that while non-concessional borrowing entails greater debt sustainability risks, excessively large volumes of concessional financing could also contribute to the risk of debt distress, and as such they need to be taken into account in IDA's work on debt sustainability. 48. DSF and IDA grant allocation. Participants strongly supported the DSF as the basis for the grant-allocation system in IDA15, which is an important element of IDA's toolkit to help address debt sustainability challenges in low-income countries.51 They endorsed continuing the use of country-specific debt distress risk ratings based on the forward-looking DSAs for determining the mix of grants and credits for IDA-only countries.52 They also agreed that when translating risk ratings into traffic lights some element of judgment should continue to be incorporated for bor- derline cases and those instances where changed country circum- stances are not reflected in available DSAs. They agreed that this should continue to be subject to a World Bank-wide clearance process and carefully monitored. 49. DSF outreach. Participants noted that the effectiveness of the DSF hinges on its broader use by both creditors and borrowers alike. They strongly supported the joint World Bank and IMF outreach 51Participants agreed on three exceptions to grant eligibility in IDA15. First, Kosovo continues to be eligible for grants in IDA15 as long as its status as part of Serbia under United Nations' Administration remains unchanged. If the status changes the relationship between the World Bank and post-status Kosovo would be reconsid- ered. Second, regardless of its debt sustainability outlook, Timor Leste will receive the grant element (i.e., 60 percent) of its allocation on grant terms in IDA15 because of its ongoing post-conflict status and constraints to its ability to contract external borrowing. Third, pre-arrears clearance allocations continue to be on grant terms to support recovery efforts by post-conflict and re-engaging countries. 52When DSAs are unavailable, a country's grant eligibility will be based on the com- parison between its latest available debt burden indicators and the applicable exter- nal debt thresholds of the DSF. 251 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 252 activities to encourage other creditors--including regional devel- opment banks and bilateral creditors--to harmonize their lending practices broadly along the lines suggested by the risk assessments contained in joint Bank-Fund DSAs. Participants noted that dis- cussions are underway to agree on guidelines for a more active role for the major regional banks53 in the DSA process. They also wel- comed the steps taken to make information about the DSF more accessible, in particular through dedicated DSF web pages on the World Bank and IMF external websites. 50. The Non-Concessional Borrowing Policy (NCBP). Participants agreed that IDA's NCBP is an important element of IDA's role in helping prevent grant-and MDRI-eligible countries from rapidly re-accumulating debt. At the same time, they agreed that unilateral action on the part of IDA is not enough; a concerted creditor and donor effort is needed to provide appropriate concessional resources to low-income countries, which in turn, need to adopt a prudent borrowing stance consistent with their debt sustainability prospects. Participants noted that relatively few country cases have been discussed to date under the NCBP largely due to lack of information on new borrowing and the time lag in receiving such information. They stressed the importance of borrower adherence to the external debt reporting requirements under the World Bank's Debt Reporting System. Participants encouraged the con- tinued application of the NCBP, particularly the ongoing creditor outreach, including to concessional and non-concessional creditors from emerging market countries. They also urged IDA to continue to follow up on new reported cases of non-concessional borrowing and to inform the IDA Board of any decision to apply a disincen- tive mechanism ahead of Board presentation of the next IDA proj- ect in the affected country. 51. Efforts to strengthen management of debt. Participants underlined the importance of debt management as an effective means of attaining and maintaining debt sustainability, especially in coun- tries benefiting from the MDRI. They noted that the current efforts included: (i) conducting training workshops on the DSF for IDA borrowers; (ii) expanding the use of the Debt Management 53These are the African Development Bank, Asian Development Bank, Inter-American Development Bank, European Bank for Reconstruction and Development, and the European Investment Bank. 252 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 253 Performance Assessment Tool, which measures and enables the monitoring of government debt management performance over time; and (iii) developing a medium-term debt management strat- egy toolkit and related advisory services for IDA borrowers. Partic- ipants noted that tools are being developed as public goods, which will initially be applied in restricted groups of countries, before being rolled out more broadly for use by all providers of technical assistance and capacity building in debt management. While they welcomed the joint World Bank-IMF efforts towards building capacity for stronger debt management in low-income countries, Participants urged Management to accelerate its efforts in this cru- cial area so that a broad group of IDA countries may benefit as quickly as possible. Participants underscored that joint World Bank-IMF efforts in debt management are needed to complement ongoing outreach to creditors and to help reinforce sustainable lending practices. They also emphasized the importance of contin- ued and strengthened cooperation between the various institutions involved in debt management capacity building, building on syner- gies and avoiding overlaps. SECTION III. IDA'S COUNTRY-LEVEL EFFECTIVENESS 52. A sharpened focus on results. Participants examined the role of IDA in ensuring effectiveness at the country level to achieve results as the second special theme of the IDA15 discussions. They looked at three sub-themes: (i) the relationship between IDA's PBA system and country level outcomes; (ii) IDA's role in moni- toring and measuring results; and (iii) IDA's role in harmonization and alignment of aid. A. Development Outcomes and Resource Allocation 53. PBA system and results. Participants reviewed IDA's PBA system, and reaffirmed that more IDA resources were being directed to countries where results were being achieved.54 They noted four main findings of the review. First, countries sustaining good policy and institutional performance over several decades will open up a size- able advantage in terms of development outcomes over a country 54IDA (2007). "Selectivity and Performance: IDA's Country Assessment and Devel- opment Effectiveness." The results control for three factors: initial outcome levels, HIV/AIDS and the Africa region. 253 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 254 with low performance ratings, assuming all other factors remain equal. Second, in countries where the quality of policies and institu- tions undergo a major change, there could be substantial changes in outcomes for decades. For example, in terms of the Human Develop- ment Index (HDI), strong improvers of policies and institutional performance advance at twice the average rate while poor perform- ers see static or declining development outcomes. Third, African countries as a group face a much more difficult development chal- lenge--controlling for policies and institutions as well as for HIV/AIDS prevalence rates, they progressed on average at half the speed of countries in other regions over the past two decades in terms of HDI (although this slow progress has been reversed some- what during the past decade). Fourth, country policy and institu- tional performance matters for success of IDA projects. In fact, country performance matters not only during the initial stages of the project but improvements during the life of the project also increase its chances of being successful. Going forward, Participants requested Management to update the study of the links between aid allocation and results, including experience with PBA and CPIA, as well as the balance between needs and performance at the time of the IDA15 Mid-Term Review. Participants urged Management to draw on the findings of the scheduled IEG review of the CPIA, if it becomes available in time. 54. Centrality of the PBA system, with ring-fenced exceptions. Based on the findings of the review, Participants reiterated the centrality of IDA's PBA system in allocating scarce aid resources because it directs more resources to countries with good policy and institu- tional performance, which in turn are correlated with better country- and project-level results. They noted that the PBA system makes IDA effective at the country level by: (i) providing a check on excessive aid allocations to poorly-performing countries, and directing resources to better-performing countries; (ii) improving the stability and predictability of aid resource flows where this is most needed--to those countries maintaining a stable or improving performance; and (iii) helping provide a standard through the use of performance ratings, which separate exogenous factors that make development more or less challenging in different countries or regions. In this regard, Participants recognized that selective, carefully ring-fenced deviations from the PBA system through cap- ping allocations to some countries, exceptional allocations to post- conflict countries (see Section IV) and topping-up funds for regional projects take into account exogenous factors affecting 254 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 255 long-term development and help address country-specific and regional needs.55 55. Simplification of the PBA formula. While Participants noted that IDA's PBA system, with its carefully ring-fenced exceptions was working well, they recognized that the formula has become com- plex over time. The formula has evolved over past replenishments, taking into account new analytical research, changing donor priori- ties and lessons gathered during implementation. While these mod- ifications over successive replenishment cycles have enhanced the effectiveness of the PBA system in directing funds to countries where results are being achieved, it has had the unintended conse- quence of becoming complex. To make the system more effective at the country level by enhancing transparency of resource flows, Deputies agreed to simplify the formula using a linear transforma- tion (details in Annex 1). In addition, Deputies also agreed to changes in the portfolio performance ratings to include only actual performance ratings and not forward looking projections, in order to lower unwarranted volatility in IDA allocations (Annex 1). Starting in IDA15, Participants requested that Management make allocations and commitments available to IDA's Executive Direc- tors for information at the end of each fiscal year. 56. Enhancing effectiveness in small states. Participants recognized the importance of IDA's support to small states with populations of 1.5 million or less given their vulnerability. Focusing on financial assistance provided by IDA to small states, Participants agreed to raise the base allocation of SDR 1.1 million per year (or SDR 3.3 million per replenishment period) provided to all countries to SDR 1.5 million per year (or SDR 4.5 million per replenishment period) to benefit the small states where base allocations constitute an important part of overall allocations. This increase keeps IDA's 55In grant element terms, including assistance provided under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), Participants noted that Africa is expected to receive an estimated 60 per- cent of IDA's resources during the IDA15 period. Further, Participants noted that many of the policy changes (a systematic approach to arrears clearance, extension of exceptional allocations to post-conflict and re-engaging countries, increase in the regional project envelope) agreed upon during the IDA15 replenishment discussions would largely benefit African countries. Finally, Participants also welcomed gradua- tion of countries from IDA as a positive development, which helped release resources during IDA15 to all regions, especially to Africa. 255 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 256 assistance to small states constant in real terms since IDA9. More- over, Participants agreed to raise the cap on IDA allocations from SDR 13.2 to SDR 19.8 per capita to adjust for dollar inflation since IDA9. Such an increase would be in line with IDA's performance orientation since the small states more likely to reach this cap would be the better performing ones. Micro states, with very small populations and large fixed costs, would also benefit. 57. Regional projects. Participants reiterated their support for IDA's regional project program as a way to promote regional integration in all regions, particularly in Sub-Saharan Africa. In recognition of their support, Participants had previously agreed to increase the topping-up funds to support regional projects from SDR 200 mil- lion to SDR 250 million at the IDA14 Mid-Term Review. In view of the continuing strong demand for IDA's regional projects, Partici- pants proposed a further increase of SDR 150 million per year dur- ing the IDA15 period, for a regional topping-up pool of SDR 1.2 billion. In addition, while IDA's regional project program has gen- erally worked well so far, Participants recognized that some coun- tries with small IDA allocations, including the small states, were having difficulty participating in regional projects given the limited size of their allocations. This is because the IDA regional project program requires participating countries to contribute a third of the cost of their participation in regional projects from their coun- try allocations. Given that regional integration is particularly important for countries with small allocations to overcome disec- onomies of scale, Participants agreed to limit country contributions to regional projects to 20 percent of the annual allocations. While this ceiling applies to all countries, Participants noted that it is intended to assist countries with small allocations. Participants requested Management to provide an overall review of the regional program, as well as the experience with the cap on country contributions to regional projects at 20 percent, at the IDA15 Mid- Term Review. B. Achieving and Measuring Results 58. IDA's focus on results. The IDA Results Measurement System (RMS) was launched in 2002 during the IDA13 replenishment and enhanced in IDA14 to strengthen IDA's focus on results. The RMS tracks two forms of effectiveness: development or country-level effectiveness which refers to the achievement of sustainable improvements in outcomes on the ground in IDA countries, and agency effectiveness which means the work that organizations in 256 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 257 the donor community do to ensure that their business practices conform to the principles of good aid management, have enabling effects on country capacity and institutions, and thus contribute to country-level effectiveness. 59. Two-tiered system. Following that logic, the IDA RMS is a two- tiered system. Tier 1 monitors aggregate progress on 14 country outcome indicators grouped into four categories: growth and poverty reduction, public financial management and investment climate, infrastructure, and human development. Tier 2 monitors IDA's contribution to development outcomes using indicators of the quality and effectiveness of IDA programs as well as examples of the outputs that IDA produces in four sectors. Participants rec- ognized that while difficulties remain in attributing specific devel- opment outcomes to particular actions by IDA, the RMS signifi- cantly contributed to strengthening the result-orientation of IDA programs and projects and urged Management to continue its efforts to further improve the management for results during IDA15. Participants also urged the World Bank over the coming years to strengthen tracking of progress on gender and environ- mental outcomes. 60. Tier 1: Monitoring Country Outcomes. Tier 1 RMS provides an overview of the economic and social progress of IDA countries during the IDA14 period. To further strengthen usefulness of Tier 1 indicators, Participants asked Management to take two specific actions by IDA15 Mid-Term Review: (i) review Tier 1 private sec- tor development indicators in view of the increased emphasis on private sector in IDA15 and closer collaboration between IFC and IDA; and (ii) review the feasibility of developing a Public Expendi- ture and Financial Accountability (PEFA)-based aggregate indica- tor to measure the quality of IDA countries' public financial man- agement and to replace the current "number of HIPC benchmarks met" indicator. 61. Statistical capacity building. Participants noted that the IDA RMS has contributed to the awareness of the lack of good quality data to inform decision making by the governments as well as the develop- ment partners. In this regard, they agreed that IDA has a role as the platform for donors and developing countries to work together in the area of statistical capacity building under the framework of PARIS21 as well as the regular Roundtables on Results. Internally, a World Bank-wide committee and an external advisory panel on statistical capacity building (established in 2006) led the effort to 257 6135-CH06_p227-284.pdf 4/2/09 2:51 PM Page 258 significantly scale up support for building statistical capacity. Par- ticipants noted that a major achievement of these World Bank- wide efforts has been the completion of National Strategies for the Development of Statistics (NSDSs) for the majority of IDA coun- tries. Participants requested that IDA, as part of its statistical capacity building efforts, work towards the collection and analysis of gender-disaggregated statistics at the country level. 62. While progress has been made, Participants noted that there remains an urgent need to close the statistical gaps in IDA coun- tries, especially in Sub-Saharan Africa, and to forge progress in implementation of the NSDSs. They urged IDA to continue its efforts to: (i) advocate improvements in the quality and frequency of data collection and reporting in IDA countries; (ii) strengthen links between statistical capacity building and public sector budget and civil service systems/reforms so that incentives for generating and using data are in place; and (iii) where appropriate, to provide resources for investments in national statistical systems. Conse- quently, in order to strengthen IDA's platform role in building sta- tistical capacity in IDA countries, Participants urged IDA to adopt a two-track approach. First, in each IDA CAS, require a more com- prehensive discussion of weaknesses in country statistical systems and their use in decision making. When relevant, follow up, as appropriate, in DPOs, Investment lending (IL), Analytical and Advisory Activities (AAA), CAS Progress Reports (CASPRs), CAS Completion Reports (CASCRs) and Implementation Com- pletion Reports (ICRs). Second, explore the potential for expand- ing and redesigning the existing Trust Fund for Statistical Capacity Building (TFSCB) to provide a mechanism to primarily finance and co-finance as well as to supervise investments in statistical capacity and implementation of NSDSs. 63. In addition, Participants urged IDA to develop a web-based data standards system to help IDA countries track their progress towards meeting internationally accepted norms of data coverage, frequency, and timeliness. Subscribers to the system can provide information about their data compilation and dissemination prac- tices for posting on the World Bank's Bulletin Board (similar to IMF's Dissemination Standards Bulletin Board), allowing monitor- ing of the quality of development statistics. Participants also asked IDA to intensify its efforts with donors and partners to identify `lead donors' for work in selected priority countries and accelerate efforts to develop a sector wide approach to building statistical capacity in these priority countries. 258 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 259 64. Tier 2: Monitoring IDA's Contribution to Country Outcomes. The second tier of the RMS monitors IDA's contribution to develop- ment effectiveness across three levels of the World Bank's work-- program, project, and aggregate outputs--while acknowledging that outcomes at the country level cannot be attributed to IDA alone. Participants noted that the implementation of the RMS dur- ing IDA14 has contributed to positive shifts in the World Bank's internal "results culture," which needs to be sustained and further mainstreamed. To ensure greater responsiveness to the IDA RMS, a Results Steering Group was formed to foster greater attention to managing for results throughout the World Bank. IDA is imple- menting training programs in developing results frameworks and using and re-evaluating them systematically during project supervi- sion and at completion to report on outcomes. In addition, revised ICR guidelines have been issued to help with more specific mea- surement of project achievements and to facilitate dissemination of experience from project design and implementation. Finally, the "IDA at Work" website provides concrete country, sector, and proj- ect level results, and helps showcase examples of IDA's contribu- tion to poverty reduction in low-income countries. Participants endorsed Management's proposal to continue this exercise. 65. Progress made. Participants discussed the steps taken by Manage- ment in support of the commitments made during the IDA14 Mid- Term Review and progress in Tier 2 indicators since then. In partic- ular, Results-based Country Assistance Strategies (RBCASs) have been mainstreamed; quality at entry remains high as evidenced by an increased percentage of projects with information on baselines, well defined Result Frameworks and institutional arrangements for project monitoring and evaluation (M&E); outcomes as measured by IEG continue to remain high, even with increasing lending com- mitments by IDA. Participants invited IEG to contribute to discus- sions at the IDA15 Mid-Term Review. 66. Areas for strengthening. Participants noted that despite progress, areas of weakness remain, especially in IDA's ability to assess key aspects of IDA contribution to country outcomes as well as to track development outcomes. A results-based CAS, which links IDA programs and projects to country priorities and systems, is one of the key instruments for IDA to ensure and monitor its con- tribution to country outcomes. To move the frontier further from monitoring the number of RBCASs to monitoring their quality, Participants urged IDA to: (i) monitor CASCR self-ratings and their independent validation by IEG; and (ii) enhance the quality 259 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 260 of CAS Results Frameworks by strengthening the emphasis on results in the corporate review process. 67. With respect to the IDA portfolio, Participants asked IDA to intro- duce additional measures to improve the quality of outcome indi- cators, the availability of baselines for key outcome indicators at entry in IDA projects, and the quality of output and outcome reporting in ICRs for IDA operations. Regarding quality at entry of IDA operations, which is highly correlated with satisfactory project outcomes and serves as a leading indicator of project results, Participants asked Management to track the percentage of operations whose outcome indicators in the project documents cover key aspects of the Project Development Objectives.To better monitor the quality of supervision, Participants asked Management to track the percentage of projects with adequate baselines for key outcome indicators, and to seek to ensure that this percentage shows a material year-on-year improvement. To improve the qual- ity of output and outcome reporting in ICRs for IDA operations, Participants asked for two actions. First, in addition to monitoring the two measures agreed at IDA14 replenishment,56 track the per- centage of ICRs that report on key outputs and outcomes from the results framework. Second, to address weaknesses in reporting on Tier 2 output indicators, based on collaborative efforts between Networks and Regions, develop lists of output indicators for four to five sectors by IDA15 Mid-Term Review to allow a more accu- rate indicative aggregation of sector-specific outputs. This would eventually replace the current practice of reporting on examples of sector-specific aggregated outputs. 68. Finally, in line with IDA's focus on results, Management will con- tinue to improve staff and Management incentives for implementa- tion of the results agenda by aligning performance evaluation to results. C. Progress in Harmonization and Alignment 69. IDA's approach to harmonization and alignment. Participants underlined that IDA should advance harmonization and alignment at the country level by helping build capacities and strengthening 56Namely: (a) the share of IDA operations that successfully achieve (or are likely to achieve) their development outcomes, and (b) the percentage of projects with satis- factory ICR quality. 260 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 261 ownership, aligning IDA assistance with country priorities, and working with country authorities to pursue harmonization with other donors. Participants agreed that IDA's role in promoting har- monization and alignment is important not only for its own activi- ties, but for the development community as a whole. In this regard, they noted that emerging new donors and creditors bring much- needed resources and development knowledge. Therefore, Partici- pants requested Management to make further efforts to engage with non-traditional partners, and facilitate "South-South" cooper- ation. Given IDA's pivotal role in the aid architecture, both inter- nationally and at the country level, Participants urged IDA to con- tinue to provide leadership and aspire to the highest standards as it implements the Paris Declaration. In this context, Participants reviewed progress made so far by IDA,57 and urged Management to take further steps to strengthen harmonization and alignment. Participants welcomed the Matrix of Actions for Harmonization and Alignment which helps sharpen IDA's focus on results and asked Management to provide an update on progress at the IDA15 Mid-Term Review. 70. Reinforcing country ownership. Recognizing the centrality of country ownership and policy space, Participants underscored the importance of robust country systems and a continued focus on capacity building. In this context, they welcomed progress made with the application of conditionality in development policy oper- ations (DPOs) under the Good Practice Principles, as outlined in the report discussed by the Board in December 2007.58 Partici- pants endorsed the key messages of the report and the 2007 consultations--to respect ownership, give space to develop home- grown reform programs, and promote greater involvement of local counterparts in planning and execution of analytic work. They asked Management to follow up on the next steps outlined in the report in order to further strengthen and deepen the implementa- tion of the good practice principles. Participants asked Manage- ment to strengthen its communications with external stakeholders and continue its dialogue with Civil Society Organizations. They also noted that the scheduled IEG evaluation of PRSCs would provide further analysis on the use of conditionality. Participants 57IDA (2007). "IDA's Role in Strengthening Country-Level Effectiveness: Strength- ening Harmonization and Alignment." 58Operational Policy and Country Services (2007). "Conditionality in Development Policy Lending." Posted on the external web at www.worldbank.org/conditionality 261 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 262 noted that IEG should include external consultations in this evalu- ation. They welcomed the proposal to further review application of conditionality as part of the DPO Retrospective in FY09. 71. Assessing the potential impact of reforms. Participants highlighted the importance of upstream poverty and social impact assessments (PSIAs) of reforms supported by IDA, particularly in sensitive pol- icy areas. They urged IDA to ensure that progress made in the use of PSIAs is sustained and strengthened. They further asked that such analysis be integrated into the PRS processes, be used to inform policy choices and be disclosed wherever possible. While conducting PSIAs, Participants urged appropriate use of analytical capacity within the countries. Participants also took note of the draft updated Good Practice Note on PSIAs and welcomed its posting on IDA's external website for public comments. They also noted that the scheduled IEG review of the World Bank's PSIA work will further contribute towards ensuring relevance and qual- ity of IDA's work in this area. Finally, Participants looked forward to the review of the World Bank's use of distributional and social analysis as part of the DPO retrospective. 72. Other areas for improvement. Going forward, Participants requested IDA to focus on areas where further progress would enhance country-level effectiveness. In particular, they asked IDA to pay closer attention to staff and Management incentives, develop country capacity by decreasing reliance on parallel Project Implementation Units (PIUs) consistent with the Paris Declara- tion, and provide an analytical framework that can assist IDA's consideration of decentralization by laying out options to better calibrate and target expertise needed and define cost effectiveness in light of budget implications. Participants also encouraged IDA to continue its work on strengthening country systems and increas- ing their use where appropriate, as well as building country capac- ity in recognition of the fundamental role that country leadership plays in the successful implementation of the Paris Declaration principles. 73. Addressing next generation issues. To further strengthen IDA's role in harmonization and alignment, Participants asked Management to complement measures identified during the IDA14 Mid-Term Review with several well-targeted additional measures, including: ˇ issuing guidelines that will require that integration of PIUs into government structures become the default option for IDA proj- 262 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 263 ects, with any proposal to establish a new parallel PIU (for example, due to fiduciary concerns) being clearly justified in project documentation; ˇ reviewing IDA's performance on predictability of disbursements, as well as the constraints to medium-term predictability of IDA disbursements at the country level at the IDA15 Mid-Term Review; ˇ reporting by Regional Management to the Board periodically, on IDA's actions at the country level to assist in the preparation and implementation of country-led strategies or plans for harmoniza- tion and alignment; ˇ updating CAS Good Practice Note to recognize and encourage joint or collaborative CAS preparation, provide guidance on how best to manage this work and encourage such collaborative work when it makes sense from a country perspective; ˇ leading an effort to gain agreement with other lenders and donors on harmonized requirements in a range of legal documentation; ˇ stepping up efforts to help countries upgrade their procurement policies and procedures and ensure their efficient implementa- tion, working in collaboration with other donors; ˇ facilitating and supporting partner countries' efforts to incorpo- rate nontraditional partners--vertical funds, non-DAC donors, and the private sector--in harmonization and alignment actions; ˇ carrying out--jointly with other interested donors--a survey of selected IDA country programs and the total amounts of co- financing and of pooled and parallel financing leveraged through IDA's budgetary support and investment lending; and ˇ enhancing incentives for harmonization and alignment by a) continuing to communicate to staff, Management commitment to harmonization and alignment as key IDA priorities; b) continuing to work with OECD-DAC and others on good practice guidance and communicating it to staff; and c) including reference to harmonization and alignment in Terms of Refer- ences for country/sector directors and managers and as parame- ters for selection and promotion to senior positions. 74. Decentralization. Decentralization of staff and devolution of decision-making authority to country offices was seen as critical to IDA's platform role, to enhancing IDA's contribution to aid effec- tiveness, and to advancing progress on harmonization and align- ment. Participants noted that IDA has taken several steps to decentralize its staff and looked forward to further progress. They requested Management to address this important issue by review- ing the appropriate skills mix, staff incentives, costs and benefits 263 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 264 with special attention to fragile states. They acknowledge that in a flat budget environment prevailing in recent years, decentralization has entailed trade-offs. They welcomed the efforts being made in the Africa region, which is pursuing an ambitious decentralization of internationally recruited staff to country offices as part of the Africa Action Plan. By planning for all new and vacant internation- ally recruited positions to be based in the field, the Africa Region expects to increase the number of internationally-recruited staff located in the field by over 50 percent by end-FY08 compared to FY06. The Region also plans to significantly increase the percent- age of projects and programs managed in the field by continuing to move towards a model where a majority of tasks are managed in the field with task managers located in one country and working on two to three. The Africa Region intends to continue to pursue this field-based recruitment effort during the IDA15 period so that the number and percentage of internationally recruited staff in the field would increase. 75. To assist in decentralization, Participants asked Management to analyze different models of staff location and develop an approach to measure cost effectiveness and better define it in the light of budget implications. Participants requested IDA to provide indica- tive estimates for decentralization during the IDA15 period, which would facilitate the monitoring of progress in this area. As a first step, Management agreed to include baseline figures in the Matrix of Actions for Harmonization and Alignment. It will also explore the possibility of providing indicative projections for the middle of the IDA15 period. 76. Finally, Participants urged the development of a draft World Bank Action Plan for aid effectiveness in preparation for the High Level Forum on Aid Effectiveness to be held in Accra in September 2008. SECTION IV. IDA'S EFFECTIVENESS IN FRAGILE STATES 77. Fragile states pose special challenges for IDA. In discussing this third special theme,59 Participants noted that fragile states repre- sent a critical challenge for IDA: while they are home to less than 19 percent of the total population in IDA-eligible countries, they 59IDA (2007). "Operational Approaches and Financing in Fragile States." 264 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 265 account for over one third of the extreme poor, almost two fifths of all child deaths and one third of 12-year-olds who did not complete primary school. Participants noted that these poor development outcomes in fragile states were a result of several challenges: weak institutions, poor governance, unstable political environments, and in some cases, ongoing violence or lingering effects of past severe conflicts. Participants recognized that these challenges made devel- opment assistance to fragile states inherently risky--weak institu- tions undermine effectiveness of aid and high vulnerability to renewed conflict increases the risks that any incipient gains made could be reversed. Engaging in fragile states can also create reputa- tional and fiduciary risks for IDA. 78. But IDA should strengthen its engagement. Despite these chal- lenges, Participants reiterated the need for IDA to strengthen its engagement in fragile states, where there are high concentrations of extreme poverty and low levels of social development. They also pointed out that the increasing of capacities in many of these coun- tries to absorb higher ODA volumes would also facilitate strength- ened engagement. Participants noted that even if the probability of donor interventions (in the form of projects and programs) being successful is relatively low, improvements in social indicators accru- ing from successful interventions could be high because these countries start from very low levels of development. Participants also maintained that disengagement and failure to address the problems of fragile states imposes costs on the neighboring coun- tries: a strong response from IDA is hence in the interests of all its members, as progress in these environments will produce positive spillover effects and help protect the development gains made in the stronger performers. A. Strategy, Instruments and Operational Response in Supporting Fragile States 79. IDA's key objectives in fragile states. Participants encouraged IDA to continue adapting its core strengths in support of the key objec- tives of state building and peace building in fragile states.While rec- ognizing that state building can be complex, Participants noted that IDA has a crucial role to play by: supporting government processes to develop budget priorities; financing policy reform; financing infrastructure and basic service delivery through the state; support- ing transparent public-private partnerships; building public financial management systems, including for the management of natural 265 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 266 resource revenues; and leading analytical work on economic and governance issues. Participants also noted that IDA has an impor- tant supporting role in furthering peace-building goals in fragile states through its core competencies in economic and development issues, by adapting economic and social programs to support peace- building goals and by participating in integrated programs with other partners. 80. Differentiating approaches based on country circumstances. Partic- ipants recognized that fragile states are heterogeneous and sup- ported the differentiation of IDA's role, strategies and operational approaches depending on the direction and pace of governance change. Participants supported a larger role for IDA in post-conflict/ peace-building transition or in gradually improving scenarios, where there is a reasonable level of government capacity to act as a con- duit for development finance to help it implement pro-poor policies and adhere to basic governance standards. In prolonged crisis sce- narios, where government capacity is non-existent or severely con- strained, Participants agreed that IDA should focus on maintaining operational readiness to scale up engagement when appropriate and make use of opportunities to provide funding for basic social services where possible. In deteriorating governance/rising conflict risk scenarios, Participants recognized IDA's comparative advan- tage was in focusing on economic dialogue, transparency and ring- fenced social development and social protection programs, working together wherever possible with other development partners to decrease conflict risk. 81. Strengthening research and results monitoring. Participants urged IDA to continue and strengthen its research and operational good practice work on fragile states. Participants noted a particular need to focus attention on strengthening operational approaches to situ- ations of deteriorating governance and rising conflict risk and ensuring operational readiness in situations of prolonged crisis, where international approaches are less well developed than post- conflict situations. Participants urged IDA to pay close attention to the gender dimension of conflict, peace-building and reconstruc- tion, and continue to focus on overall results. Participants wel- comed the multi-donor results framework tool developed by the World Bank and other partners to assist national authorities in post-conflict and political transition situations. Participants further urged IDA to work with other donors to develop adequate indica- tors for measuring progress on state-building and peace building activities in fragile states. 266 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 267 82. Working together better in fragile states. Recognizing that support for state-building and peace-building roles requires coordinated action, Participants encouraged IDA to continue its partnership with the UN and other donors. In this regard, they noted that IDA, in response to an IEG evaluation of World Bank's work in fragile states, has increased its participation in shared strategies with other donors to strengthen cooperation at the country level. They also noted IDA has improved collaboration with the UN at several lev- els and welcomed the work by the World Bank and the UN on a new partnership agreement in response to crises and emergencies, urging that this reinforce collaboration while ensuring flexibility to adapt to different country environments and borrower needs. Par- ticipants noted that, going forward, cooperation with the UN sys- tem should be deepened, based on a clearer understanding of the relative comparative strengths of IDA and the UN. In addition, they welcomed the role played by IDA in coordinating joint needs assessments and recovery plans and external financing needs in several countries. Participants urged IDA to continue working with regional institutions in leading dialogue on conflict prevention and governance. Participants also encouraged IDA to continue working with the UN, EC and other bilateral donors at the OECD-DAC to revise the guidance for integrated post-conflict recovery planning, which aims at greater coherence among political, security, develop- ment, and humanitarian actors in fragile transitions. 83. World Bank's organizational and operational reforms. Partici- pants supported the steps taken by the Executive Directors to fine tune IDA's organizational, policy and procedural approaches to better respond to the needs of the fragile states, learning from its experience and in close cooperation with other actors. Participants welcomed the new policy on rapid response in crisis and emergen- cies approved by the Executive Directors in February 2007. The World Bank will report on progress under the new rapid response policy during FY09 to the Executive Directors. They recognized that there are fiduciary risks involved in working in emergency sit- uations and noted the risk-mitigation measures put in place by the policy. They encouraged measures to further strengthen opera- tional support and build on lessons learned, together with increased field presence and enhancing human resource systems to attract staff and reward strong performance in these difficult envi- ronments. Participants particularly stressed the need to look not only at human resource incentives but at the skills and experience of staff working in fragile states, where knowledge and understand- ing of political economy issues is particularly important. Finally, 267 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 268 Participants urged IDA to report on progress on human resources reforms, cooperation with the UN and other actors, implementa- tion of DAC Principles, adaptation of country assistance strategies to fragile and conflict-affected environments, and progress on development of better indicators for measuring progress on state- building and peace building activities in fragile states at the IDA15 Mid-Term Review. B. Financing for Fragile States 84. A review of IDA's financing arrangements. Participants welcomed a review of IDA's financing arrangements in fragile states. Partici- pants noted that fragile states face very different challenges and governance environments and require different financing approaches. From a financing perspective, participants noted that fragile states fall into four categories: (i) countries receiving alloca- tions based on IDA's PBA system; (ii) countries receiving excep- tional post-conflict allocations; (iii) countries receiving exceptional allocations upon re-engaging with IDA after a prolonged period of inactivity but which did not qualify for post-conflict assistance; and (iv) countries that do not receive IDA financing because they are in arrears on IDA payments. 85. PBA system and fragile states. Participants recognized that the financing for fragile states based on the PBA system, with carefully ring-fenced exceptions for post-conflict and re-engaging countries, was working well. The PBA system calibrates IDA resources to many fragile states in line with their governance and policy per- formance. Participants noted while volumes of resources were set by the PBA system, the terms of IDA's assistance to fragile states to address their special needs were authorized during recent replenish- ment rounds. In particular, the IDA14 grants framework directs grants to debt-distressed countries, many of which are fragile states. In addition, many fragile states are also expected to receive debt relief from IDA through the HIPC Initiative and MDRI. 86. Post-conflict countries. Participants supported lengthening the duration of exceptional assistance to post-conflict countries from 7 to 10 years by doubling the phase-out period from 3 to 6 years. They maintained that these exceptional allocations during the phase-out period should continue to be calibrated on a case-by- case basis, based on country performance as measured by the Post- Conflict Performance Indicators (PCPIs). In this context, Partici- pants welcomed the proposed public disclosure of PCPIs during 268 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 269 the IDA15 period, after review by an external panel, whose find- ings will also be disclosed. Participants also supported linking the share of post-conflict allocations in overall allocations to changes in the overall replenishment size. Further, Participants agreed that some post-conflict countries could be graduated from receiving exceptional allocations earlier than ten years depending on country circumstances. Participants agreed to the retention of additional flexibility in deciding post-conflict allocations in the first year as agreed during the IDA13 replenishment discussions. 87. Countries re-engaging with IDA after a prolonged period of inac- tivity. Participants agreed to the lengthening of duration of excep- tional allocations to countries re-engaging with IDA after a pro- longed period of inactivity from 3 to 5 years, including three years of phase-out to PBA allocations. They noted that if country per- formance does not improve, then countries should be "graduated" from receiving exceptional allocations before the end of 5 years. They agreed that the level of resources made available would be around half of what would be provided under the post-conflict allocation system. 88. Participants noted that the increase in financing for post-conflict and re-engaging countries will be proportional to the increase in IDA15 commitment authority, otherwise implementation of these changes would take away resources from other countries in the PBA pool. 89. Participants asked Management to present an assessment of the implementation experience with the lengthened phase-out for post-conflict and re-engagement allocations at the IDA15 Mid- Term Review. C. A Systematic Approach to Arrears Clearance 90. Timely and adequate support from IDA. Participants noted that six fragile states have arrears to IBRD and/or IDA, and that the arrears are large relative to country capacity to pay as well as to other available sources of financing.60 Once each country is ready for re-engagement, the arrears constitute a significant barrier to access to timely and adequate support for recovery from IDA, as well as to debt relief available under the HIPC Initiative and 60A seventh country, Liberia, cleared its arrears on December 5, 2007. 269 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 270 MDRI. Participants, therefore, endorsed Management's proposal for a systematic approach to help finance the clearance of these arrears using IDA resources.61 91. Coverage and conditions for support. The approach would cover IDA countries with arrears to IBRD and/or IDA as of December 31, 2006 and grandfathered for eligibility under the HIPC Initiative but that have yet to reach the HIPC decision point.62 Eligible countries would only be able to receive exceptional arrears clear- ance support after meeting the World Bank's requirements for re- engagement, as well as conditions for each operation to finance arrears clearance. Such conditions would include a medium-term growth-oriented reform program, satisfactory performance under an IMF program, and a financing plan that provides for the full clearance of arrears to the World Bank and for the normalization of relations with other multilateral institutions where there are also arrears to those institutions. Participants noted that while there are moral hazards and other risks associated with exceptional support for arrears clearance, these risks are reduced by recent IDA poli- cies relating to grants, debt relief and non-concessional borrowing. 92. Tailored approach. Participants also noted that while all of the six countries in arrears are currently classified as fragile states their economic and financial capacity, and levels of indebtedness, vary widely. These factors would affect the design of arrears clearance packages, including with respect to the share of arrears that each country would be expected to finance from its own resources. This share and, thus, also the level of support required from IDA, would be determined through a detailed assessment prepared by World Bank staff. Lastly, Participants noted that each arrears clearance operation, and thus also each exceptional arrears clearance alloca- tion, would be subject to the approval of the Executive Directors. 93. Pre-arrears clearance grants. Participants also noted the positive experience with the selective use of IDA grants to support early recovery efforts in post-conflict countries in advance of arrears clearance. They endorsed Management's proposals to enhance the framework for pre-arrears clearance grants, and urged Manage- ment to finalize these proposals with IDA's Executive Directors. 61IDA (June, 2007). "Further Elaboration of a Systematic Approach to Arrears Clearance." 62Two countries would need to be grandfathered into HIPC before they could be eli- gible for exceptional arrears clearance support. 270 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 271 SECTION V. MANAGING IDA'S FINANCIAL RESOURCES 94. Deputies recognized that the IDA15 replenishment period (FY09­11) is a critical time for the donor community to increase assistance to developing countries to help them in their efforts to reach the MDGs by 2015. Towards this end, they endorsed a total replenishment of SDR 27.3 billion (equivalent to USD 41.6 bil- lion)63 during the IDA15 period, which would constitute the IDA15 commitment authority envelope. A. Commitment Authority 95. Sources of commitment authority. IDA's commitment authority is backed by donor contributions, internal resources of IDA, transfers64 from IBRD and IFC, and by other resources, as avail- able. Donor contributions supporting IDA15 commitment author- ity are provided as part of the IDA15 replenishment itself as well as under the MDRI replenishment. Deputies noted that Manage- ment will review IDA's commitment authority and report to the Board on an annual basis, per current practice. This review will take into account the status of donor financing commitments to the IDA15 replenishment and the MDRI replenishment. In the event of a shortfall of donor commitments, the level of IDA15 commit- ment authority could be adjusted over the course of the IDA15 period. Deputies reiterated the commitment made under MDRI to fully finance the costs to IDA of providing MDRI debt relief, and that financing of these costs would be additional to regular IDA contributions. 96. Sources.The volume for each source of funding is as follows: ˇ Deputies endorsed SDR 16.5 billion (equivalent to USD 25.1 bil- lion) of total donor contributions for the IDA15 replenishment. IDA15 donor contributions comprise: (i) regular contributions of SDR 14.6 billion (equivalent to USD 22.3 billion), net of the structural financing gap;65 (ii) contributions to cover IDA's debt relief costs under the HIPC Initiative during the IDA15 commit- ment period (FY09­11) of SDR 1.1 billion (equivalent to USD 63At the IDA15 foreign exchange reference rate of USD/SDR 1.52448. 64IBRD transfers are made out of its net income. IFC designates grants to IDA out of its retained earnings. 65Including the structural financing gap, the total target volume of regular donor contributions is SDR 17.8 billion. 271 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 272 1.7 billion); and (iii) contributions to finance arrears clearance operations of SDR 0.8 billion66 (equivalent to USD 1.1 billion). ˇ Deputies reaffirmed the need to provide additional donor con- tributions for the MDRI replenishment of SDR 4.1 billion (equivalent to USD 6.3 billion), so as to cover IDA's debt relief costs due to the MDRI during the IDA15 disbursement period (FY09­19) as agreed under MDRI. ˇ Deputies acknowledged proposed commitments against IDA's internal resources in the amount of SDR 4.1 billion (equivalent to USD 6.3 billion), subject to approval by IDA's Executive Directors. Internal resources include credit repayments received from both current and past IDA borrowers, as well as resources from IDA's liquid assets including investment income. ˇ Replenishment funding would also comprise expected transfers from IBRD net income in the amount of SDR 1.3 billion and grants from IFC in the amount of SDR 1.3 billion, in each case subject to availability of net income and annual approvals by the IBRD and IFC (equivalent to an aggregate World Bank Group contribution of USD 3.9 billion). 97. Donor contributions of SDR 16.5 billion continue to be the pri- mary source of IDA's commitment authority, accounting for some 60 percent of the total resources supporting IDA15. Donor com- mitments for the IDA15 replenishment (subscriptions and contri- butions) of SDR 16.5 billion as shown in Table 1 of Annex 3 reflect the agreement reached among donors. Donor contributions for the MDRI replenishment of SDR 4.1 billion are governed by the MDRI Resolution.67 Under the terms of the MDRI Resolution, IDA has undertaken to reflect changes in actual and estimated costs of MDRI debt forgiveness by making adjustments to donor contributions to the MDRI every three years normally in conjunc- tion with regular replenishments.68 A revised Compensation Schedule and revised Donor Contribution tables to the MDRI Resolution will be provided to members reflecting the updated cost estimates for the MDRI as of September 30, 2007. Corre- sponding adjustments to reflect these updated amounts are also 66Total estimated arrears clearance costs during IDA15 are SDR 907 million, of which donors pledged to cover SDR 742 million. 67"Additions to IDA's Resources: Financing the Multilateral Debt Relief Initiative," IDA Resolution No. 211 adopted by IDA's Board of Governors on April 21, 2006 (the "MDRI Resolution"). 68Paragraphs 1(f), 2(c) and 2(d) of the MDRI Resolution. 272 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 273 required in the payment schedule attached to each member's Instrument of Commitment for its MDRI subscription and contri- bution.69 Section VI provides further information regarding donors' contributions to finance debt relief costs under the HIPC Initiative and the MDRI and for arrears clearance operations. ˇ Prospective new members and donors. Participants welcomed China, Cyprus, Egypt, Estonia, Latvia and Lithuania to the IDA15 discussions as new IDA members and new donors. Partic- ipants welcomed representatives from Argentina and Croatia as observers to replenishment discussions and encouraged them to become donors to IDA. Participants noted that, in their view, there are still a number of countries that have the economic capability to contribute to IDA but have not yet done so. Participants acknowledged Man- agement's efforts to reach out to these countries and agreed that efforts should continue to encourage them to become IDA donors. ˇ Burden-sharing. Participants acknowledged the dual challenge of securing an adequate replenishment size while achieving an acceptable burden-sharing framework. Deputies noted that adjusted Gross National Income (GNI) remains a useful point of reference for IDA shares, but that it cannot be followed rigidly as the basis for determining replenishment shares. In view of substantial exchange rate movements in recent months and years, Deputies agreed that flexibility was required on the part of each donor for a successful outcome of the replenishment. ˇ Pro rata provision. Donor contributions become available in three equal tranches to the extent they are unqualified. It is the practice of some donors to deposit qualified instruments of com- mitment to IDA because payments are subject to annual legisla- tive approvals. In view of this, since IDA7, donors under the pro rata provision have restricted the use of part of their contribu- tions proportionate to any payment shortfall from donors whose contributions exceed 20 percent of the total. This provision did not apply in IDA14 since no single donor contribution accounted for 20 percent of total donor contributions. Deputies agreed to discontinue the use of the pro rata provision for IDA15 to ensure predictability of resources and protect the interests of IDA recipients. 69Members will be notified of the necessary amendments to their MDRI Instruments of Commitment and the payment schedule following adoption of the IDA15 Resolu- tion by the Board of Governors. 273 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 274 ˇ Additional contributions. Donors may, at any time, make addi- tional contributions to the amounts shown in Table 1 of Annex 3. Such contributions would reduce the financing gap and result in a corresponding increase in IDA's available commitment authority. ˇ Voting rights. Participants agreed that the existing IDA voting rights system continue for the IDA15 period. 98. Internal resources. To increase IDA's commitment authority, Par- ticipants endorsed IDA's existing practice of using internal resources to complement donor resources. They supported the analysis presented during the replenishment discussions demon- strating that IDA would have an adequate level of internal resources to continue to support future replenishments. Partici- pants noted that credit repayments constitute an important compo- nent of internal resources and recognized the impact of the MDRI, HIPC Initiative and IDA grants on credit reflows. They confirmed their commitment to compensate IDA for these forgone reflows on a "dollar-for-dollar" basis. Participants reviewed the structure of IDA's liquid resources and discussed Management's projections regarding IDA's long-term financial capacity. 99. IBRD and IFC contributions. Participants welcomed the under- taking for a planned record contribution of USD 3.5 billion70 from World Bank Group resources in support of an ambitious IDA15 replenishment. Participants noted that the ability of IDA to assist low-income countries over the next three years depends heavily on the agreed IDA15 funding package and that a critical component of this funding package was the continued ability of IBRD and IFC to contribute financial resources to IDA. Such transfers are approved annually by IBRD's Board of Governors and IFC's Board of Directors.71 Participants emphasized the importance they attach to continued and substantial transfers from IBRD and IFC to IDA. They urged IBRD and IFC to main- tain their financial support to IDA15, consistent with IBRD's and IFC's financial priorities. 70This amount is expected to generate additional investment income of USD 400 mil- lion and provide total financing for IDA15 of USD 3.9 billion, equivalent to SDR 2.6 billion. 71IFC's Board of Governors notes with approval the designation of retained earn- ings by IFC's Board of Directors. 274 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 275 B. Replenishment Effectiveness 100. Deputies recommended that financing for IDA15 be made sub- ject to an effectiveness condition similar to that used under previ- ous IDA replenishments. The purpose of such a condition is to ensure that most donor financing, including contributions by major donors, is in place on time. Deputies recommended that IDA15 become effective when Instruments or Qualified Instru- ments of Commitment accounting for 60 percent of the total donor contributions have been received by IDA. They recom- mended a target effectiveness date for the replenishment of December 15, 2008. 101. Deputies noted the expected limited availability of commitment authority for making grants at the start of the IDA15 period, before the replenishment becomes effective. Principal reflows derived from credits extended in replenishments prior to IDA11 cannot be used for the financing of grants as the associated replenishment resolutions did not authorize the making of grants. IDA would, therefore, need to rely on donor contributions to back new grant commitments during IDA15. Since many IDA countries receive their entire assistance in the form of grants, the timely availability of donor contributions to support commitment authority for grants is of particular concern. 102. In response to this concern, Deputies noted the importance of providing their Instruments of Commitment as early as possible, so as to advance the date of reaching the threshold for replenish- ment effectiveness.72 Deputies also noted two options to address the constraint associated with the provision of grants, both of which were used with success in IDA14: (i) the continued use of the Advance Contribution Scheme; and (ii) the use of conditional grants and convertible credits. ˇ Advance Contribution Scheme. In past IDA replenishments, some donors agreed that a share of their contributions could be used before the replenishment becomes effective. Under this Advance Contribution Scheme, one-third of the amount speci- fied in a contributing member's Instrument of Commitment would be released for commitment authority purposes, provided 72Some donors' budgetary and legislative timetables permit them to make their con- tributions at an early stage in the fiscal year. 275 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 276 that at least a defined minimum threshold volume of total donor Instruments of Commitment has been received. In view of the limited availability of commitment authority for grants during the first six months of IDA15, Deputies agreed to eliminate the threshold for the Advance Contribution Scheme, following the same procedure as in IDA14. Consequently, unless stated otherwise by the donor, one third of that donor's contributions will be released for commitment immediately upon receipt of the donor's Instrument of Com- mitment by IDA. The second and third tranches of donor con- tributions will be released at the beginning of each fiscal year, on July 1, 2009 and July 1, 2010, respectively. ˇ Conditional grants and convertible credits. Deputies noted two other options to address constraints on commitment authority: (a) using conditional grants; and (b) converting credits to grants. Grants during the first six months of IDA15 could be made con- ditional upon availability of sufficient commitment authority from donor contributions. Alternatively, IDA15 grant operations could be approved as credits in the first six months of IDA15 with an automatic conversion to grant terms as and when suffi- cient donor resources become available. Upon conversion, any IDA service and commitment charges paid under the credit would be refunded to the borrower.To the extent required, Man- agement would adopt a combination of conditional grants and conversion of credits into grants, as described above, following the same procedures that were used successfully in IDA14. C. Contribution Procedures 103. Payments. Deputies recommended that the contribution and pay- ment arrangements for donors continue as in previous replenish- ments. Donors will provide their contributions in the form of cash or notes in three equal annual installments. The first installment will be due 31 days after the replenishment becomes effective, which is expected by December 15, 2008, except for advance con- tributions which will be paid as specified by IDA. The second installment will be paid no later than January 15, 2010, and the third installment no later than January 17, 2011. IDA may agree to postpone any payment under the terms of the IDA15 Resolution. 104. Deputies recommended that subscription and payment arrange- ments for non-donors continue as in previous replenishments. Sub- scription payments of non-contributing members will be fully paid in one installment and in national currency, either in cash or notes. 276 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 277 105. Encashment. Donor contributions will be encashed on an approxi- mately pro rata basis among donors following the agreed regular encashment schedule (Attachment II of the IDA15 Resolution). Donors may, with the agreement of Management, adjust their encashments to reflect their legal and budgetary requirements. Deputies agreed to indicate any special preferences in this regard to Management when donors deposit their Instruments of Commit- ment. Deputies recognized that the timing of encashments affects IDA's resource base. They agreed that in exceptional cases, should unavoidable delays occur, IDA's encashment requests to the affected donor are expected to be adjusted to take into account any past payment delays by that donor and any related lost income to IDA. IDA may also agree with any member on a revised encash- ment schedule that yields at least an equivalent value to IDA. 106. Valuation of contributions. Deputies agreed to denominate their contributions in their respective national currencies if freely con- vertible, in SDRs, or, with the approval of IDA, in any convertible currency of another member country. They also agreed to deter- mine the currency of denomination for each donor contribution as of the date of conclusion of the IDA15 replenishment discus- sions. For the purpose of establishing the equivalence of value among different currencies and the SDR, donors agreed to use the average daily exchange rate for the period April 1, 2007, through September 30, 2007. To help maintain the value of contri- butions from donors with high inflation rates, contributions from donors with domestic annual inflation of 10 percent or higher in 2004­2006 will be denominated in SDRs.73 107. IDA14 funds carried into IDA15 replenishment. Deputies agreed that the IDA14 funds carried over into the IDA15 will be administered under the terms of the IDA14 replenishment with respect to financial management matters such as payment, encashment, and allocation of voting rights. For ongoing opera- tional matters, such as commitment authority, IDA15 terms, con- ditions and procedures will apply. 108. Reporting of contributions. Participants requested Management to report regularly to the Executive Directors on the status of each 73Inflation is measured by the rate of change of the national Consumer Price Index (CPI), or the GDP deflator in case of donor countries for which the CPI is not available. 277 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 278 donor's commitment and actual contributions to IDA and to include this information in the Annual Report of the World Bank and other publications as appropriate. Participants also requested Management to analyze the structural financing gap in IDA replenishments for the IDA15 Mid-Term Review. SECTION VI. FINANCING OF DEBT RELIEF AND ARREARS CLEARANCE 109. Participants reiterated their strong support for the HIPC Initia- tive and MDRI, which provide debt relief to the world's poorest and most indebted countries. They noted the progress that has been made in the implementation of the enhanced HIPC Initia- tive since its adoption at the beginning of IDA12. They also noted IDA's implementation of the MDRI beginning in FY07, the second year of the IDA14 period, and reviewed updated cost estimates for IDA's lost credit reflows and the status of donor financing for the MDRI. In addition, Deputies discussed the financing arrangements for exceptional IDA allocations for arrears clearance beginning in IDA15 and supported expanding the scope of the HIPC Trust Fund (which will be renamed as the Debt Relief Trust Fund after approval of such amendments by HIPC donors and IBRD's and IDA's Executive Directors) to accept resources from donors and IBRD net income transfers for this purpose. A. The HIPC Initiative 110. Impact on IDA finances. Participants reviewed the impact of HIPC debt relief on IDA's finances. They reaffirmed the basic HIPC principle that debt relief should not reduce IDA's capacity to support poverty reduction and development and should be additional to other IDA assistance. They noted that current resources available to finance IDA's debt relief costs will be fully utilized by the end of calendar year 2008, i.e., early in the IDA15 period. IDA will, therefore, need additional financing of about SDR 1.2 billion during the IDA15 period to finance forgone credit reflows due to the HIPC Initiative. 111. Two mechanisms. Deputies supported the continued use of the two mechanisms introduced in IDA14 for donors' HIPC-related contri- butions: (a) contributing to IDA directly; or (b) channeling contri- 278 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 279 butions through the Debt Relief Trust Fund.74 The HIPC-related contributions will be recorded separately from regular IDA contri- butions in order to ensure that HIPC debt relief is additional to other IDA assistance. As in IDA14, each donor's share will be determined based on the agreed burden-sharing and shown as a separate column in Table 1 of Annex 3 of the IDA15 Resolution. 112. Donor funds provided directly to IDA will be treated in the same manner as regular contributions, becoming part of IDA's general resources. Donors can choose to submit one Instrument of Com- mitment that would include the amount of the HIPC-related con- tribution, or separate Instruments of Commitment for regular IDA contributions and HIPC-related contributions. Donors can pay their HIPC contributions in cash or promissory notes. Since these additional contributions will reimburse IDA for its forgone reflows during FY09­11, they will be drawn down over this three- year period. Donors will receive voting rights for contributions upon payment to IDA15. 113. Donors can also make HIPC contributions directly to the Debt Relief Trust Fund. Donors would sign contribution agreements with IDA, as administrator of the Debt Relief Trust Fund, specifying the contribution amount and payment modalities--in cash or in promis- sory notes to be drawn down over a three-year period. Donors will deposit their contributions in the World Bank component of the Debt Relief Trust Fund, and contributions will be transferred to IDA to reimburse IDA for its forgone credit reflows. Since these funds become part of IDA's general resources at the time of transfer from the Debt Relief Trust Fund to IDA's cash accounts, donors will receive additional voting rights in IDA following such transfers. Management will report periodically to donors on the status of their contributions to the Debt Relief Trust Fund. B. The MDRI 114. Replacement of lost credit reflows. In the spring of 2006, donors and shareholders approved IDA's participation in the MDRI, which provides 100 percent cancellation of eligible debt owed to IDA by countries reaching the HIPC completion point. Starting 74Upon approval of amendments to the HIPC Trust Fund by donors and the Execu- tive Directors. 279 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 280 on July 1, 2006 and over the next four decades of MDRI imple- mentation, IDA is projected to cancel an estimated total amount of SDR 24.7 billion (equivalent to USD 37.6 billion) of credit reflows from eligible HIPC countries. Under the MDRI replen- ishment arrangements, donors have committed to compensate IDA's MDRI costs on a `dollar-for-dollar' basis, over the duration of the cancelled credits. Donors "affirmed their unanimous com- mitment to provide MDRI financing additional to donors' regular support to IDA in real terms75 with IDA14 as the baseline, and they emphasized that this commitment should be sustained over the entire 40-year period of IDA's forgone credit reflows."76 Under the MDRI, donors agreed that the "contribution baseline would be indicative in nature and intended to demonstrate trans- parently the delivery by donors on their strong commitment to the additionality of debt relief financing. The aggregate level of successive IDA replenishments will ultimately depend on each member's sovereign decision on its future contributions to regular IDA replenishments."77 Participants noted that the agreed vol- ume of donor contributions for IDA15 represented an increase of about 25 percent over IDA14, thus exceeding the MDRI baseline. Participants reiterated the need for full replacement of the lost credit reflows due to the MDRI so as to ensure that the debt relief granted by IDA will be additional for recipient countries, providing further resources for their development efforts. 115. MDRI replenishment. Donor contributions for IDA's MDRI costs are recorded under a separate replenishment and added to IDA's general resources, following established IDA procedures. Deputies reaffirmed the need for full replacement of lost credit reflows due to debt relief and their commitment "to fully finance the costs to IDA of providing MDRI debt relief over the 40-year time span of the MDRI".78 To preserve IDA's advance commit- ment capacity--under which IDA uses its stream of available 75Under MDRI, donors "established a contribution baseline at the level of regular donor contributions in IDA14, to be kept constant in real SDR terms over time." See paragraph 52 of "IDA's Implementation of the Multilateral Debt Relief Initiative" (IDA/R2006-0042), approved by IDA's Executive Directors on March 28, 2006. 76Paragraph 42 of "Additions to Resources: Financing the Multilateral Debt Relief Initiative," approved by IDA's Executive Directors on March 28, 2006. 77Paragraph 39, ibid. 78Paragraph 5, ibid. 280 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 281 future credit reflows to back future disbursements on approved credits and grants--Deputies acknowledged the need to provide unqualified, firm MDRI financing commitments over the disburse- ment period of each future IDA replenishment. Specifically, in the context of the MDRI replenishment, donors recognized that: "It will be critical to provide an Unqualified Commitment for subscrip- tions and contributions in FY07 and 08". For the remainder of the first decade of MDRI implementation (FY09­16), donors recog- nized that: "Firm, Unqualified Commitments are also needed over this period. Participants recognized that some donors would require periodic approval of their contributions over this period, resulting in the provision of some portion of Qualified Commit- ments. . . . Participants encouraged IDA's donors to take all nec- essary steps in successive replenishments to provide firm financing on a rolling basis."79 To back IDA15 commitment authority, Deputies reaffirmed the urgent need to provide additional donor contributions for the MDRI replenishment of SDR 4.1 billion, so as to cover IDA's debt relief costs due to the MDRI during the IDA15 disbursement period (FY09­19) as agreed under the MDRI. In that context, Participants noted with appreciation that a number of donors have already provided unqualified MDRI financing commitments over 40 years, including Ireland, Kuwait, Luxembourg, Portugal, Russia, and South Africa. 116. Participants noted that the value of IDA's lost credit reflows under the MDRI will continue to fluctuate over the 40-year period, and that the MDRI financing arrangements include a mechanism to adjust the compensatory amounts payable by donors in conjunc- tion with every regular IDA replenishment. Participants reviewed the updated cost estimates for the MDRI, as of September 30, 2007, which provide the basis for updates to the MDRI cost tables and donor payment schedule. Revised tables to the MDRI Resolu- tion reflecting the updated cost estimates will be provided to members. Corresponding adjustments to reflect these updated amounts are also required in the payment schedule attached to each member's Instrument of Commitment for its MDRI subscrip- tion and contribution. Donors noted that, in the Instrument of Commitment, each member had agreed to amend its Instrument of Commitment to reflect any such adjustment. 79Paragraph 19 (a) and (b), ibid. 281 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 282 117. Monitoring donor contributions. Participants reaffirmed that there should be continued monitoring of donor contributions to the MDRI. For transparency, donor contributions to the MDRI will continue to be recorded separately from regular IDA replen- ishment contributions, as additional to donors' regular financial support to IDA. They noted that donor contributions to the MDRI have been reported in IDA's fiscal year 2007 financial statements and will continue to be reported regularly in IDA's future financial statements during the IDA15 period. Such report- ing will contain information on the volume of debt relief deliv- ered by IDA under the MDRI and the amount of compensatory donor resources received. C. Financing of Arrears Clearance Operations 118. Burden shares. The cost of providing exceptional support for arrears clearance to countries eligible per the criteria set out in Section IV.C and that could be expected to clear arrears before the end of the IDA15 period is estimated to be SDR 0.9 billion. Donors agreed that this amount is included as a new, additional part of IDA's overall new financing commitments during IDA15 based on fair burden shares. In general, therefore, Donors sup- ported the use of their HIPC (i.e., IDA13) burden shares to finance arrears clearance operations in IDA15; this would be appropriate since exceptional support for arrears clearance front- loads HIPC debt relief, which IDA donors have committed to finance on an ongoing basis. Most donors expressed support to scale up their HIPC burden shares to close the structural gap for financing arrears clearance operations in IDA15. Participants also noted that the IDA-financed clearance of arrears to IBRD would lead to a corresponding increase in IBRD's income. They noted that such increases would result in an increase in IBRD's ability to make financial contributions to IDA additional to the indica- tive level proposed for the IDA15 period. Participants expressed the hope that such additional contributions would be used to close the structural gap in the MDRI financing framework. 119. Set aside of resources. Participants agreed that the resources pro- vided to finance arrears clearance operations would be released for commitment only when such arrears clearance actually takes place. Hence any unused resources during the IDA15 period would be carried over into IDA16, and used to finance arrears clearance operations when the eligible countries become ready to 282 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 283 re-engage. They also agreed that if the resources requested for IDA15 would be insufficient to cover the full cost of the excep- tional support, the shortfall would be made up in IDA16, in the same manner that HIPC costs are updated at each replenishment based on use and availability of resources. Once the projected arrears for eligible countries have been cleared, Deputies will dis- cuss how to use the remaining funds. 120. Debt Relief Trust Fund. Participants noted that the widening of the scope of the HIPC Debt Initiative Trust Fund (Debt Relief Trust Fund) to allow it to receive donor contributions for arrears clearance provided an additional avenue for donors to finance the cost associated with arrears clearance. They also noted that any donor making bilateral contributions towards coverage of arrears clearance costs into the arrears clearance window of the Debt Relief Trust Fund, ahead of IDA15, will have the option of having these contributions credited against the donor's burden-shared contributions for arrears clearance financing during IDA15. Simi- larly, in IDA15, donors have the option of contributing directly to IDA or channeling their contribution for arrears clearance through the Debt Relief Trust Fund. The Debt Relief Trust Fund would be able to receive contributions from IBRD net income, which would be used to address any remaining structural gap in the financing of IDA's debt relief costs, including HIPC and MDRI. 121. IBRD debt. In HIPC countries with debt to IBRD, Participants also agreed that IDA provide debt relief grants or credits where these would be necessary in order for the World Bank to deliver its share of debt relief under the HIPC Initiative. Such debt relief grants from IDA (for interim HIPC relief on IBRD debt service payments) and prepayment by IDA of remaining IBRD claims at the HIPC completion point are part of the implementation modalities for IDA's delivery of debt relief under the HIPC process.80 The countries for which such assistance could be required are Côte d'Ivoire and Zimbabwe, if Zimbabwe is reclas- sified as a HIPC. The amounts required for this purpose are not expected to be significant during the IDA15 period. 80IDA (2000). "Heavily Indebted Poor Countries (HIPC) Initiative: Note on Modalities for Implementing HIPC Debt Relief under the Enhanced Framework," IDA/R 2000-4, approved by the Executive Directors on January 25, 2000. 283 6135-CH06_p227-284.pdf 4/1/09 12:14 PM Page 284 SECTION VII. RECOMMENDATION 122. The Executive Directors recommend to the Board of Governors the adoption of the draft IDA15 Resolution. . . .1 (This report was approved and its recommendation was adopted by the Board of Governors on April 23, 2008) 1 See page 182. 284 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 285 REPORT OF THE BOARD OF DIRECTORS OF IFC May 2, 2008 Membership of the State of Qatar 1. In accordance with Section 17 of the By-Laws of the International Finance Corporation, the application of the State of Qatar for mem- bership in IFC is hereby submitted to the Board of Governors. 2. Representatives of the State of Qatar have been consulted infor- mally regarding the terms and conditions recommended in the attached draft Resolution and they have raised no objection thereto. 3. Accordingly, the Board of Directors recommends that the Board of Governors adopt the Resolution. . . .1 (This report was approved and its recommendation was adopted by the Board of Governors on June 13, 2008) 1 See page 175. 285 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 286 REPORT OF THE BOARD OF DIRECTORS OF MIGA July 9, 2008 2008 Regular Election of Directors 1. Resolution No. 75, adopted by the Council of Governors on August 3, 2006, provides that a Regular Election of Directors shall take place in connection with the 2008 Annual Meeting of the Council of Governors. It is proposed that this Regular Election be con- ducted by rapid means of communication so as to conclude a rea- sonable time in advance of November 1, 2008, when the term of office of the elected Directors shall commence. 2. Since the 2006 Regular Election of Directors, a Category One country (New Zealand) and three Category Two countries (Dji- bouti, Liberia and Montenegro) completed all of their membership requirements. 3. The Report of the Ad Hoc Committee on the Rules for the 2006 Regular Election of MIGA Directors stated once again in para- graph 3 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 represen- tation and of allowing 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 172 MIGA member countries (as opposed to 185 IBRD, 167 IDA and 179 IFC member countries), while, as stated in paragraph 2 above, at least another four member countries will participate in the upcoming election. 5. This increase in membership since 2006 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 Directors/Directors of the World Bank Group institu- tions have continued to increase in number and complexity. 286 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 287 6. In view of these developments and noting that Article 2 of the MIGA Convention mandates the Agency to complement the activ- ities of other members of the World Bank Group, the Board of Directors makes the following recommendations. RECOMMENDATIONS Size of the Board 7. The Board of Directors recommends that the number of Directors remain at its present twenty-four. Composition of the Board 8. The Board of Directors urges the Governors to form, as closely as possible, 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 con- sensus of Directors that, beginning with the 1992 Election of Direc- tors, Governors should be urged to nominate candidates based in Washington, D.C., and all Governors complied with this suggestion in the 1992, 1994, 1996, 1998, 2000, 2002, 2004 and 2006 Regular Elections. It is again recommended that Governors be urged to nominate the same persons as Directors of MIGA as those nomi- nated 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 Alter- nate Directors of MIGA as those appointed to be Alternate Exec- utive Directors/Alternate Directors to the Boards of the other World Bank Group institutions. Term of Office 11. Article 32(c) of the Convention and Section 10 of the MIGA By- Laws provide 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 recommends that the Council continue this practice. It is also recommended that the 2008 Regular Election of Directors be held by requesting nominations and conducting ballots by rapid 287 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 288 means of communication so as to conclude a reasonable time in advance of November 1, 2008, when the term of office of the elected Directors shall commence. Maximum and Minimum Percentages of Votes Applicable to the Election 12. For the purpose of Schedule B to the MIGA Convention, para- graph 9 of the Rules for the 2006 Regular Election of Directors set the maximum and minimum percentages of voting power applica- ble to the 2006 Regular Election at 15 and 3, respectively, of eligi- ble votes. These percentages appear appropriate for the election of the number of Directors to be recommended in the attached report, and therefore the Board of Directors recommends that they be made applicable to the 2008 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 2008 Regular Election, the Council of Governors could modify them before the start of the election. 13. On October 3, 2004, the Council of Governors adopted Resolution No. 70 entitled "Parity of Voting Power in MIGA" so that the aggregate number of votes of Category One members would be the same as the aggregate number of votes of the Category Two members as required by Article 39 of the Convention. Therefore, a member country's vote is calculated on the basis of its membership votes plus its subscription votes plus the parity votes. 14. The Board of Directors also recommends that the subsequent Reg- ular Election of Directors take place in connection with the Annual Meeting of the Council of Governors in 2010. 15. Accordingly, the Board of Directors recommends that the Council of Governors adopt the Resolution . . .1 and Rules for the 2008 Regu- lar Election of Directors embodying the above recommendations. (This report was approved and its recommendation was adopted by the Council of Governors on August 1, 2008) 1 See page 197. 288 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 289 Rules for the 2008 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 Chairman acting as Chairman. (d) "Governor" includes the Alternate Governor or any tempo- rary Alternate Governor, when acting for the Governor. (e) "Secretary" means the Corporate Secretary or any acting Cor- porate Secretary of the Agency. (f) "Election" means the 2008 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 pro- visions 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 2008 election shall be held by requesting nominations and con- ducting ballots so as to conclude a reasonable time in advance of November 1, 2008, 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 conduct of the election. For this purpose: (a) Twenty-four Directors shall be elected. (b) Six Directors shall be elected separately, one each by the Gov- ernors 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 para- graphs 5 through 12 below. 289 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 290 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 dur- ing 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, 2008, 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, particularly those elected by more than one Governor, are urged to appoint the same persons as Alter- nate 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. (e) If a nominee withdraws from the ballot after the closing date of the nomination period, but before the closing date of the ballot, the Secretary shall inform all Governors eligible to vote of such withdrawal and invite them to submit nominations of a candidate by rapid means of communication during a suitable period specified by the Secretary. At the end of the prescribed period of time for this nomination, the Secretary shall compile a new list of candidates with all individuals who were nomi- nated by at least one Governor in either nomination period, and circulate that list by rapid means of communication to all Governors eligible to vote with an invitation to vote through similar channels before the end of the balloting period. 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. 290 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 291 (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 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 2008 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 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 concerned 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 per- cent of eligible votes. ANNOUNCEMENT OF THE RESULT 10. After the tally of the last ballot, the Chairman shall cause to be dis- tributed a statement setting forth the result of the election. EFFECTIVE DATE OF ELECTION 11. The effective date of the election shall be November 1, 2008, and the term of office of the elected Directors shall commence on that date. Incumbent elected Directors shall serve through the day pre- ceding 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 identi- fying the members or Governors concerned. 291 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 292 MULTILATERAL INVESTMENT GUARANTEE AGENCY 2008 REGULAR ELECTION OF DIRECTORS STATEMENT OF RESULTS OF ELECTION, OCTOBER 13, 2008 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 E. Whitney DEBEVOISE United States 32,823 Toru SHIKIBU Japan 9,238 Michael HOFMANN Germany 9,195 Ambroise FAYOLLE France 8,824 Susanna MOOREHEAD United Kingdom 8,824 ZOU Jiayi China 5,789 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 Svein AASS 8,038 Denmark 1,524 Estonia 374 Finland 1,316 Iceland 349 Latvia 430 Lithuania 446 Norway 1,491 Sweden 2,108 Abdulrahman M. ALMOFADHI 5,787 Saudi Arabia 5,787 Gino ALZETTA 11,501 Austria 1,625 Belarus 492 Belgium 3,836 292 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 293 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Czech Republic 1,043 Hungary 1,253 Kazakhstan 627 Luxembourg 463 Slovak Republic 650 Slovenia 439 Turkey 1,073 Jorge Humberto BOTERO 7,405 Brazil 2,865 Colombia 1,029 Dominican Republic 406 Ecuador 580 Haiti 334 Panama 490 Philippines 743 Suriname 341 Trinidad and Tobago 617 Dante CONTRERAS 5,839 Argentina 2,469 Bolivia 479 Chile 1,114 Paraguay 400 Peru 916 Uruguay 461 Sid Ahmed DIB 7,217 Afghanistan 377 Algeria 1,403 Ghana 691 Iran, Islamic Republic of 1,918 Morocco 872 Pakistan 1,422 Tunisia 534 James HAGAN 7,740 Australia 3,278 Cambodia 423 Korea, Republic of 1,050 Micronesia, Fed. States of 309 Mongolia 317 293 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 294 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes New Zealand 772 Palau 309 Papua New Guinea 355 Samoa 309 Solomon Islands 309 Vanuatu 309 Merza H. HASAN 8,835 Bahrain 395 Egypt, Arab Republic of 1,068 Iraq 609 Jordan 430 Kuwait 1,898 Lebanon 509 Libya 808 Maldives 309 Oman 425 Qatar 500 Syrian Arab Republic 555 United Arab Emirates 915 Yemen, Republic of 414 Dhanendra KUMAR 7,225 Bangladesh 858 India 5,630 Sri Lanka 737 Alexey G. KVASOV 5,787 Russian Federation 5,787 Giovanni MAJNONI 7,974 Albania 361 Greece 752 Italy 5,229 Malta 391 Portugal 932 Timor-Leste 309 Toga MCINTOSH 10,975 Botswana 347 Burundi 333 Ethiopia 382 Gambia, The 309 294 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 295 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Kenya 562 Lesotho 347 Liberia 343 Malawi 336 Mozambique 430 Namibia 366 Nigeria 1,746 Seychelles 309 Sierra Leone 391 South Africa 1,921 Sudan 465 Swaziland 317 Tanzania 507 Uganda 492 Zambia 577 Zimbabwe 495 Michel MORDASINI 6,449 Azerbaijan 374 Kyrgyz Republic 336 Poland 1,023 Serbia 666 Switzerland 2,902 Tajikistan 389 Turkmenistan 325 Uzbekistan 434 Louis Philippe ONG SENG 7,994 Benin 367 Burkina Faso 320 Cameroon 366 Cape Verde 309 Central African Republic 319 Chad 319 Congo, Dem. Rep. of 855 Congo, Republic of 374 Cote d'Ivoire 569 Djibouti 309 Equatorial Guinea 309 Gabon 428 Guinea 350 Guinea-Bissau 309 295 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 296 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Madagascar 435 Mali 402 Mauritius 412 Rwanda 391 Senegal 515 Togo 336 Jose A. ROJAS R. 6,331 Costa Rica 465 El Salvador 381 Guatemala 399 Honduras 437 Nicaragua 439 Spain 2,524 Venezuela, Rep. 1,686 Bolivariana de Ruud TREFFERS 12,020 Armenia 339 Bosnia and Herzegovina 339 Bulgaria 902 Croatia 589 Cyprus 442 Georgia 370 Israel 1,094 Macedonia, FYR 347 Moldova 355 Montenegro 320 Netherlands 4,081 Romania 1,237 Ukraine 1,605 Sun VITHESPONGSE 6,596 Fiji 330 Indonesia 2,108 Lao People's Dem. Rep. 319 Malaysia 1,279 Nepal 381 Singapore 531 Thailand 1,001 Vietnam 647 296 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 297 Members Whose Votes Counted Number Candidate Elected Toward Election of Votes Total Votes Samy WATSON 10,405 Antigua and Barbuda 309 Bahamas, The 435 Barbados 379 Belize 347 Canada 5,484 Dominica 309 Grenada 309 Guyana 343 Ireland 909 Jamaica 578 St. Kitts and Nevis 309 St. Lucia 347 St. Vincent and the 347 Grenadines Total Number of Countries Voted 170 218,811 /s/ /s/ Carmen Maria Madriz Contreras Carl-Hermann G. Schlettwein (Costa Rica) (Namibia) Teller Teller 297 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 298 ACCREDITED MEMBERS OF THE DELEGATIONS AT THE 2008 ANNUAL MEETINGS Afghanistan Amine Kherbi Soraya Mellali Governor Amor Nedjai Anwar ul-Haq Ahady Angola Alternate Governor Wahidullah Shahrani Adviser Joaquim Flavio Couto Adviser Ana Beatriz G. De Ceita Da Costa Khaleda Atta Mauro Fonseca Murtaza Bahrami Bernardo Lourenco Said Tayeb Jawad Lucombo Joaquim Luveia Shah Mehrabi Mario Miguel Tia Raappana Amadeu Leitao Nunes Celso Justino Pongolola Albania Matias Sacutingo Beatriz Ferreira de Andrade Santos Governor Ridvan Bode Antigua and Barbuda # Alternate Governor Governor Fatos Ibrahimi Whitfield Harris Adviser Alternate Governor Mimoza Vangjel Dhembi Curtis Silston Toni Gogu Nezir Haldeda Adviser Gramoz Kolasi Deborah-Mae Lovell Elona Krypa Genci Mamani Argentina Algeria Governor Carlos Fernandez Governor Karim Djoudi Alternate Governor Martin Abeles* Alternate Governor Pablo Barone* Abdelhak Bedjaoui Adviser Adviser Felix Alberto Camarasa Hadia Amrane Victorio Carpintieri Hadji Babaammi Adrian Consentino Mohamed Bensabri Bernardo Lischinsky Sid Ahmed Dib Hector Timerman Ahmed El-Hamri Luis Viana Rostom Fadli * Temporary <> Not a member of IFC # Not a member of IDA 298 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 299 Armenia Adviser Azar Alasgarov Governor Yashar Aliyev Vahram Nercissiantz Rashad Orujov Ulvi Fuad Seyidzade Alternate Governor Ashraf Shikhaliyev Tigran Davtyan Bahamas, The # Adviser Tigran Sargsyan Governor Adrine Ter-Grigoryan Zhivargo Laing Australia Alternate Governor Colin Higgs* Governor Wayne Swan Adviser Jerry Butler Alternate Governor Paul Feeney Paul Flanagan* Rhoda M. Jackson Corrine L. Miller Adviser Chet Neymour Nicolas Keith Brown Carl Oliver Rebecca Bryant Sharon Turner Jean-Bernard Carrasco Simon D. Wilson James Chalmers Simon R. Young Robert Christie Matthew Coghlan Bahrain # Robin Davies Damien Dunn Governor Jim Hagan Ahmed Bin Mohammed Al-Khalifa Steven Morling Kellie Olsen Alternate Governor Susan Richards Yousif Abdulla Humood Paul Scott Andrew Thomas Bangladesh Austria Governor A.B. Mirza Md. Azizul Islam Alternate Governor Edith Frauwallner Alternate Governor Marcus Heinz* Md. Aminul Islam Bhuiyan Adviser Adviser Carl De Colle Md. Mahfuzul Haque Gerhard Gunz Md. Humayun Kabir Konstantin Huber Zakir Ahmed Khan Walter Mayr Muhammad Zulqar Nain Azerbaijan Barbados Alternate Governor Governor Ilqar Fatizada Darcy Boyce * Temporary <> Not a member of IFC # Not a member of IDA 299 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 300 Alternate Governor Bhutan Grantley W. Smith Governor Adviser Lyonpo Wangdi Norbu Donna Forde Michael Ian King Alternate Governor Patrick McCaskie Kapil Sharma Belarus # Bolivia Governor Governor Vladimir Amarin Carlos Villegas Quiroga Alternate Governor Alternate Governor Gennady Medvedev* Luis Alberto Arce Catacora Adviser Adviser Andrei Jumkou Varinia Cecilia Daza Foronda Oleg Kravchenko Hernando Larrazabal Cordova Oleg Morozov Raul S. Mendoza Patino Mikhail V. Nikitsenka Oleg Popov Bosnia and Herzegovina Sergei Roumas Alexandr Rutkovsky Governor Nikola Spiric Belgium Alternate Governor Governor Gordana Zivkovic Bernard Andre Clerfayt Adviser Adviser Dragana Aleksic Gino Alzetta Vjekoslav Bevanda Patrik De Coster Dara Crnic-Babic Kurt Delodder Aleksandar Dzombic Erwin De Wandel Adnan Hadrovic Philippe Gerard Haris Ihtijarevic Willy Kiekens Donko Jovic Christian Panneels Sveto Miletic Johan Rosseel Bisera Turkovic Stephane J.M.E.B. Rottier Dirk Slaats Botswana Dominique Struye de Swielande Harold Vandermeulen Governor Serwalo S.G. Tumelo Benin Alternate Governor Adviser Boniface G. Mphetlhe* Abel Agbebleo Adam Dende Affo Adviser Nounagnon Aristide Djidjoho Lapologang Caesar Lekoa Babatunde Mohamed Gado Ita Mary Mannathoko Martin Nani Gbedey Ontefetse Kenneth Matambo Cyrille Oguin Michael Moleleke Hermann Orou Takou Peggy Onkutlwile Serame * Temporary <> Not a member of IFC # Not a member of IDA 300 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 301 Brazil Alternate Governor Aminuddin Taib* Governor Maria Celina B. Arraes Adviser Zaki Hassanol Alternate Governor Shamsul Bharin Hussain Luiz Eduardo Melin Honeyta Mustapha Marcos Galvao* Irwan Rashid Henrique de Campos Meirelles* Antonio de Aguiar Patriota* Bulgaria # Rogerio Studart* Alternate Governor Adviser Dimitar Kostov Maria Isabel Rezende Aboim Leandro Martins Alves Adviser Pompeu Andreucci Neto Lachezar Borisov Fernanda Arraes Rumyana Kyuchukova Luis Antonio Balduino Paulo Henrique Braga da Silva Burkina Faso Rodrigo Cabral Marco Aurelio Cardoso Governor Luciano Galvao Coutinho Francois M. Zoundi Jose Pedro Fachada Silva Joao Carlos Ferraz Alternate Governor Marcelo E. Fiche Lene Sebgo Eduardo Fingerl Ives Fulber Adviser Admilson Garcia Issa Benjamin Baguian Renata Graf Boureima Balima Artur Cardoso de Lacerda Marie Didier Francois Rogerio Lot Issaka Kargougou Sandro Marcondes Jose Carlos Miranda Burundi Ricardo de Moraes Monteiro Sergio Nazare Governor Alvaro Luiz Vereda Oliveira Clotilde Nizigama Alexandre P. Rego Eduardo Saboia Alternate Governor Paulo Sampaio Leon Nimbona Carlos Henrique Moojen de Abreu e Silva Adviser Ramiro Alves da Silva Edouard Bizimana Luis Gustavo Mansur Siqueira Donatien Bwabo Natalia B.S. Speer Beatrice Hamenyayo Paulo Fontoura Valle Pamphile Muderega Carlos Augusto Vidotto Desire Musharitse Jacques Ngendakumana Brunei Darussalam <># Nicodeme Nimenya Dieudonne Nintunze Governor Celestin Niyongabo Abdul Rahman Ibrahim Mathias Sinamenye Bonaventure Sota * Temporary <> Not a member of IFC # Not a member of IDA 301 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 302 Cambodia Alternate Governor Margaret Biggs Governor Thora Broughton* Aun Porn Moniroth Antoine Brunelle Cote* Brendan Carley* Alternate Governor Adam Chambers* Vissoth Vongsey Nancy Clifford* John Davies* Adviser Graham Flack* Ratha Chey Nathalie Gauthier* Bonnaroth Houl Laird Hindle* Phalla Kim Gary Holub* Sopheak Kim Diane Jacovella* Meng Eang Nay Anna Kwik* Seilava Ros Tiff Macklem* Srey Siyout Steven McLaren* Kresna Tauch Chan Chisholm Pothier* Rithipol Tith Steve Pugliese* Jonathan Rothschild* Cameroon Samy Watson* Governor Adviser Louis Paul Motaze Chadrick Buffel Robert Chiew Alternate Governor Jim Haley Dieudonne Evou Mekou Alanna Heath Julian Karaguesian Adviser Susan Love Philibert Andzembe David Cal MacWilliam Georges Diffo Nigtiopop Sheila Niven Didier Edoa Michael Wilson Blaise Essomba Ngoula Terence F. Winsor Joseph Bienvenu Foe Atangana Nazaire Fotso Ndefo Cape Verde Idriss Ahmed Idriss Yves Sererin Kamgna Alternate Governor Barthelemy Kouezo Sandro De Brito* Bela Lazare Rene T. Mbappou Edjenguele Central African Republic Lucie Mboto Fouda Armel Mbouloukoue Governor Gregoire Mebada Mebada Sylvain Maliko Alphonse Ngbako Francois Ngoubene Alternate Governor Michelin Njoh Bendert Bokia Edith Strafort Pedie Alexandre Renamy-Lariot Adviser Jean Tchoffo Assane Abdalla Kadre Albert Besse Canada Marie Laure Dengou Dokossi- Nozikoum Governor Honore Mbaye James Michael Flaherty * Temporary <> Not a member of IFC # Not a member of IDA 302 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 303 Chad Colombia Governor Governor Ousmane Matar Breme Oscar Ivan Zuluaga Alternate Governor Alternate Governor Doudoua Bichara Carolina Renteria Carolina Barco* Adviser Jorge Humberto Botero* Mahamat Ali Adoum Luis G. Echeverri* Viviana Lara Castilla* Chile Juan Pablo Zarate* Governor Adviser Andres Velasco Branes Ivan Duque Maria Catalina Escobar Alternate Governor Maria Alejandra Gutierrez Mario Campos* Luis Cespedes Cifuentes* Comoros Eric Parrado* Raul Saez* Governor Ibrahim Houssen Hassan Adviser Francisco Bernasconi Alternate Governor Dante Contreras Said Abdillah China Congo, Democratic Republic of the Alternate Governor Adviser Li Yong Chiriji Celestin Chiza Chiva Xiaoxia Sun* Zola Diambuana Wu Jianjun* Dieu Donne Essimbo Numayeme Yang Yingming* Manu Xiaosong Zheng* Makiadi Ephem Ghonda Zou Jiayi* Genevieve Inagosi Jean Claude Kabongo Adviser Kayembe Kayembe Wa Zhijun Cheng Blaise Kiangala Ne Tulente Rui Li Camille Kos'isaka Nkombe Zhenyi Tang Firmin EyOlanga Koto Wang Yanning Ntahwa Kuderwa Ying Wang Pierre Le Beller Wang Zhongjing Lobota Liondjo Fan Wu Numbi Lumbila Dongning Xu Paul Luwansangu Licheng Yao Mapon Matata Ponyo Yixin Yao Faida Mitifu Guochun Zhang Joseph Mukania Kabwe Tianwei Zhang Tambo A. Kabila Mukendi Ciyong Zou Pongola Honore Mulangu Kashama Mkoy Mulossa Dede Jean-Claude Nachega Tadi Lewa Ndongala * Temporary <> Not a member of IFC # Not a member of IDA 303 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 304 Nzinga Vincent Ngonga Marijan Gubic Mawakani Samba Vladimira Ivandic Jean Sefu-Idonge Anton Kovacev Jose Sele Yalaghuli Jelena Peric Tshamala Serge Ivan Pitesa Felicien Tshibangu Luamuela Hrvoje Radovanic Moise Tshimenga Tshibangu Svjetlana Ricl-Jozef wa Bilenga Tshishimbi Cyprus Congo, Republic of Alternate Governor Governor Kyriacos Kakouris* Pierre Moussa Leslie G. Manison* Andreas Trokkos* Adviser Lipipi Catherin Adviser Serge Mombouli Michael Sarris Costa Rica Czech Republic Governor Governor Guillermo Zuniga Chaves Miroslav Kalousek Alternate Governor Alternate Governor Francisco de Paula Gutierrez Eva Anderova* Carmen Maria Madriz Contreras* Adviser Cote d'Ivoire Karel Bauer Pavel Frelich Governor Ondrej Jakob Paul Antoine Bohoun Bouabre Pavel Kafka Petr Kavan Alternate Governor Ivan Kocarnik Henri Philippe Dacoury-Tabley* Jan Kohout Kouame Kouassi* Miloslav Kubicek Jiri Maceska Adviser Petr Polacek Charles Koffi Petr Sedlacek Jeanne Kouame-Foldah Ivana Vlkova Yehouan Anatole Tohougbe Denmark Croatia Governor Governor Ulla Toernaes Ivan Suker Alternate Governor Alternate Governor Ib Petersen Zdravko Maric Adviser Adviser Geert Aagaard Andersen Silvija Belajec Eva Grambye Kolinda Grabar-Kitarovic Jens Haarlov * Temporary <> Not a member of IFC # Not a member of IDA 304 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 305 Klaus Kirkegaard Jensen Amr Ramadan Lotte Machon Ahmed Rostom Friis Arne Petersen Hisham Seif Eldin Trine Thygesen Sameh Shoukry Djibouti El Salvador Governor Governor Ali Farah Assoweh Guillermo Funes Alternate Governor Alternate Governor Simon Mibrathu Manuel Rosales Adviser Adviser Roble Olhaye Luis Adalberto Aquino Mohamed Kayad Sikieh Nelly Lacayo Anderson Dominican Republic Equatorial Guinea Governor Governor Juan Temistocles Montas Jose Ela Oyana Alternate Governor Adviser Vicente Bengoa Albizu Miguel Engonga Job Obiang Esono Mbengono Adviser Agustin Loeri-Bisquit Jaime Alvarez Luis Ondo Obono Magdalena Lizardo Luis Reyes Eritrea Ecuador Adviser Gebreselassie Y. Tesfamichael Governor Maria Elsa Viteri Acaiturri Estonia Alternate Governor Governor Miguel Ruiz Martinez Ivari Padar Adviser Alternate Governor Pablo Proano Martin Poder* Karina Saenz Xavier Santillan Adviser Riina Laigo Egypt, Arab Republic of Ulle Lohmus Toomas Moor Governor Helen Popp Mahmoud Mohieldin Ethiopia Adviser Ashraf El Rabiey Governor Maher Elsherif Sufian Ahmed Hossam Nasser * Temporary <> Not a member of IFC # Not a member of IDA 305 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 306 Adviser Adviser Habba Haaleo Addisu David Appia Demissie Dejene Bedanie Gerard Belet E. Getachewu Gizaw Jerome Cachau Mulu Ketsela Yves Censi Elias Madebo Genevieve Chedeville-Murray Felleke Mammo Benoit Coeure Abie Sano Mehamed Sonia Criseo Yewondowssen Teshome Tesema Aude de Amorim Eyob Tesfaye Isabelle Deleu Eyob Tekalign Tolina Alain Demarolle Helene Djoufelkit Fiji Corinne Dromer Bertrand Marie Jean Dumont Governor Ambroise Fayolle Peceli V. Vocea Francois Giovalucchi Antoine Gobelet Alternate Governor Herve Gonsard Sanjay Rohit Prasad* Pierre Jaillet Muriel Jakubowicz Adviser Frederick Jeske-Schonhoven Makereta Alfereti-Konrote Kacim Kellal Veretariki Lomalagi Regis Koetschet Penijamini Lomaloma Amina Lahreche Jean-Pierre Landau Finland Marc Lautre Frederic Lefebvre Alternate Governor Emmanuel Lenain Velipekka Nummikoski* Roland Lomme Marjatta Rasi* Francois Marion Raphael Martinez Adviser Christian Masset Pasi Hellman Marc Mertillo Inkeri Hirvensalo Emmanuel Moulin Pekka Hukka Danielle Noirclerc-Schoenberg Tuuli Juurikkala Elizabeth Peri Pauli Kariniemi Cyrille Pierre Tapani Kaskeala Jean-Guillaume Poulain Teppo Koivisto Caroline Regis Jarmo Kuuttila Julien Rencki Timo Laitinen Luc Rigouzzo Ari-Pekka Latti Jean-Michel Severino Satu-Leena Santala Marc-Olivier Strauss-Kahn Agnes Surry France Bruno Sylvestre Luis Vassy Governor Pierre Vimont Christine Lagarde Jean-Patrick Yanitch Alternate Governor Gabon Xavier Musca Alternate Governor Christian Bongo Ondimba * Temporary <> Not a member of IFC # Not a member of IDA 306 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 307 Adviser Johannes Haindl Yolande Assele Ebinda Qays Hamad Alba Biffot Holger Illi Vanessa Bongo Hans-Peter Jugel Carlos Boungou Benjamin Knoedler Symphorien Engone Claudia Mueller Sonia Melissa Kwaou Klaus Scharioth Michele C. Lamarche Joachim Steffens Huguette Moussodou M. Gerhard Thiedemann Jean Philippe Ndong Biyogho Holger Ziegeler Gambia, The Ghana Governor Alternate Governor Mousa G. Bala Gaye Anthony Akoto Osei Alternate Governor Adviser Mod A.K. Secka Francis Addo Regina Ohene-Darko Adutwum Adviser Richard Winfred Anane Abdul Cole Nelly Apo Abdoulie Jallow Yaw Opoku Atuahene Bua Saidy Michael Ayesu Kwame Bawuah-Edusei Georgia Angela Brown Farhat Kofi Frimpong Governor Drusilla Frimpong Addo Nika Gilauri Paul S.M. Koranteng Francis Kpodo-Diaba Adviser Edward Kwakye Marekh Khamaladez Winnifred Nafisa Mahama Josephine Manu Germany Samuel Mensah Peter Ofori-Asumadu Governor Kwabena Boadu Oku-Afari Heidemarie Wieczorek-Zeul Kevin Okyere David Oppon-Kusi Alternate Governor Matilda Osei-Agyeman Michael Hofmann* Yvonne Odoley Quansah Adolf Kloke-Lesch* David Mawuko Awumee Quist Klaus D. Stein* Ruediger Von Kleist* Greece Stephan von Stenglin* Juergen Zattler* Governor George A. Provopoulos Adviser Stephan Bethe Alternate Governor Georg Michael Blome Panayotis Thomopoulos Michael Brendle George Politakis* Holger Fabig Roger Fischer Adviser Paul Garaycochea Charalambos Dimitriou Uwe Gehlen Gerassimos Floros * Temporary <> Not a member of IFC # Not a member of IDA 307 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 308 Karolos Gadis Kalidou Diallo Dimitrios Giannos Mohamed Diare Nikolaos Keranis Fatoumata Diop Tryphon Kollintzas Abraham Richard Kamano Vasiliki Krokida Saoudatou Sow Alexandros Mallias Facinet Sylla Markella Eleonora Mantika Sekou Traore Emmanouela Markoglou Ioannis Papadakis Guinea-Bissau Spyros P. Papanicolaou Panagiotis A. Pliatsikas Governor Paraskevi Protopapas Carlos Mussa Balde Panagiotis Varagkis Augustinos Vitzilaios Alternate Governor Miranda Xafa Jeremias Pereira Grenada Adviser Vasco Da Silva Governor Gabriela A. Fernandes Gomes V. Nazim Burke Romao Lopes Varela, Jr. Marcellino Vaz Alternate Governor Timothy Antoine Guyana Guatemala Governor Ashni Singh Governor Juan Alberto Fuentes Alternate Governor Lawrence T. Williams Alternate Governor Luis Alejandro Alejos Haiti Jose Ricardo Barrientos* Governor Adviser Daniel Dorsainvil Anai Herrera Ivar Romero Alternate Governor Tomas Rosada Marie Victoire Vanette Vincent* Guinea Adviser Raymond Alcide Joseph Governor Alfred Fils Metellus Ousmane Dore Yves Rock Abel Metellus Romel Troissou Alternate Governor Djigui Camara Honduras Adviser Governor Madikaba Camara Rebeca Patricia Santos Bintou Conde Alpha Oumar Diakite Alternate Governor Abdoulaye Diallo Hugo Alejandro Castillo * Temporary <> Not a member of IFC # Not a member of IDA 308 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 309 Adviser Indonesia Orlando Garner Hugo Rolando Noe Pino Alternate Governor Elizabeth Rivera Paskah Suzeta Roque Rivera Yani Rosenthal Hidalgo Adviser Adriyanto Hungary Salman Al-Farisi Irfa Ampri Alternate Governor Adi Cahyadi Almos Kovacs* Amnu Fuadiy Zsuzsanna Varga* Edward Robert Gustely Ridwan Hassan Adviser Edward Hutabarat Sandor Karacsony Dian Lestari Sudjadnan Parnohadiningrat Iceland Singgih Riphat Tri Iriastuti Rusli Alternate Governor Maurin Sitorus Arni M. Mathiesen Langgeng Subur Pinkan Tulung Adviser Lukita Dinarsyah Tuwo Finnus Thor Birgisson Noeroso L. Wahyudi Thordur Gudjonsson Jonas Haraldsson Iran, Islamic Republic of Albert Jonsson Anna Katrin Vilhjalmsdottir Governor Seyyed Shams Al-din Hosseini India Alternate Governor Alternate Governor Koorosh Taherfar* Ashok Chawla Dhanendra Kumar* Adviser Madhusudan Prasad* Seyed Kazem Delkhosh Abatari Arvind Virmani* Farid Ghaderi Gholamreza Mesbahi Moghaddam Adviser Mohammadreza Tabesh Bhupinder Singh Bhalla Subrahmanyam Bhamidipati Iraq Navin Kumar Choudhary Krishnamurti Damodaran Governor Raminder Jassal Baker J. Al-Zubaidy Saranyan Krishnan Rakesh Mohan Alternate Governor Deepak Mohanty Faik Abdul Rasool Maddirala Nagaraju Vishal Nair Adviser R.K. Pattnaik Zaidoon Abdulwahab Partha Ray Ammar Al Durra Ranendra Sen Naufel Al Hassan Vediappa Senthil Karim Muslim Almusawi Shyamala Shukla Yasser Baker Al-Zubaydi Jawed Usmani Zaid Baker Al-Zubaydi Samir Shakir Mahmood Sumaida'ie * Temporary <> Not a member of IFC # Not a member of IDA 309 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 310 Ireland Silvia Limoncini Giandomenico Magliano Governor Giovanni Majnoni Martin Mansergh Francesca Manno Marco Martella Alternate Governor Massimiliano Mazzanti Donal Cahalane* Edoardo Pucci Carmel Keane* Fabio Rossi Marianne Nolan* Arrigo Sadun Michael J. Somers* Chiara Salabe Francesco Spadafora Adviser Basilio Antonio Toth Michael Collins Francesca Valeri Adrian J. Kearns Carlo Villanacci Suzanne Mitchell Vincenzo Zezza Thomas Whelan Jamaica # Israel Governor Alternate Governor Audley Shaw Ohad Bar-Efrat* Oded Brook* Alternate Governor Wesley George Hughes Adviser Donald George Wehby* Yoav Soffer Adviser Italy Richard Bernal Sharon A. Crooks Governor Franz Hall Mario Draghi Anthony Johnson Sharon Miller Alternate Governor Darlene Marie Morrison Carlo Monticelli Japan Adviser Paola Ansuini Governor Federico Arcelli Shoichi Nakagawa Carlo Baldocci Stefano Beltrame Alternate Governor Perluigi Bologna Masaaki Shirakawa Dante Brandi Mitsuhiro Furusawa* Maria Cannata Akinari Horii* Sebastiano Cardi Daisuke Kotegawa* Angelo Carriero Daikichi Momma* Giovanni Castellaneta Takehiko Nakao* Adolfo Di Carluccio Toru Shikibu* Luigi Di Santo Naoyuki Shinohara* Giannandrea Falchi Masato Watanabe* Luca Ferrari Francesco Galietti Adviser Giorgio Gomel Yuichi Adachi Vittorio Grilli Shuhei Aoki Giorgio Leccesi Toshinori Doi * Temporary <> Not a member of IFC # Not a member of IDA 310 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 311 Daiho Fujii Jordan Hajime Hayashi Naoki Hikota Governor Satoshi Ikeda Suhair Al-Ali Yoichiro Ikeda Akihiro Ino Alternate Governor Takamitsu Ishii Ghaith Zureiqat Tetsuro Ito Motoo Kakihara Adviser Masato Kanda Zaid Raad Al-Hussein Takeshi Kato Hazar Ibrahim Badran Michihiro Kishimoto Fawaz Farouk Bilbeisi Takayuki Kobayashi Naohisa Konita Kazakhstan Eiji Kozuka Takahito Marushima Governor Susumu Matsumoto Galymzhan Pirmatov Ken Matsushita Takashi Miura Adviser Naruki Mori Dastan Eleukenov Tokio Morita Olzhas Issabekov Kenichi Nishikata Takaaki Nomoto Kenya Takuya Nomura Risa Ohkawa Governor Kenji Okamura John N. Michuki Shinsuke Okawa Yoshihito Saito Alternate Governor Wataru Sakata Joseph Kanja Kinyua Rie Shimizu Hitoshi Shimura Adviser Yoshihiro Sugimoto Florence Abonyo Kenji Suwazono Galma M. Boru Shinji Suzuki Philip Kituti Kaloki Atsushi Tajima John Kamau Hiroshi Takami Moses Kanagi Yasuo Takamura James Mwangi Kiiru Rintaro Tamaki Jackson Kinyanjui Masaru Tanaka Peter Macharia Aiko Toyama James Omingo Magara Akihiro Tsuchiya Washington Jakoyo Midiwo Yasusuke Tsukagoshi Joseph Muchemi Atsushi Uchida John Muya Koji Uemura Geoffrey Ngungi Mwau Motofumi Umemura Beatrice Ngoe Aiichiro Yamamoto Justus Nyamunga Takashi Yamamoto Peter N.R.O. Ogego Tatsuo Yamasaki Chrysanthus Barnabas Okemo Akihiko Yoshida Raphael Owino Otieno Tomoyuki Yoshida Seif Suleiman * Temporary <> Not a member of IFC # Not a member of IDA 311 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 312 Kiribati Adviser Adel Alasossi Governor Waleed Al-Bahar Natan Teewe Marwan Al Ghanem Eid Al-Rasheedi Alternate Governor Yousef B.Y.H. Al-Roumi Timi Kaiekieki Saleh Y. Al-Sagoubi Ahmed Al Tahous Korea, Republic of Hesham Ibrahim Al-Waqayan Fahad Khaled Al Zamami Governor Ahmad Mohammed Abdulrehman Man Soo Kang Bastaki Farouk A. Bastaki Alternate Governor Khalifa Hamada Seongtae Lee Eun-Bo Jeong* Kyrgyz Republic Gwang Ju Rhee* Governor Adviser Tadjikan B. Kalimbetova Dongkoo Chang Taek-Kyu Chang Alternate Governor Jae Hoon Choi Azamat S. Dikambaev Jae-Hyuk Choi Sang Mok Choi Adviser So Young Choi Sadriddin Djienbekov Namki Hong Zamira Sydykova Byoungha Hwang Han Chul Jang Lao People's Democratic Republic Beomseok Kim Do-Hyeong Kim Governor Jae Hwan Kim Viengthong Siphandone Kyu Ok Kim Myung Kee Kim Alternate Governor Seung Tae Kim Thipphakone Chanthavongsa Donghun Lee Phiane Philakone* Jeong Wook Lee Kangone Lee Adviser Seong-Yeon Lee Rithikone Phoummasack Eun-Suk Park Monesavanh Phoutthavong Hyun-Woo Park Khuanchai Siphakanlaya Wonshik Park Bounthanh Vongsoury Jin Hong Rim Sangpyo Suh Latvia Keun Man Yook Tae Sik Yoon Governor Kyong Hwa Yu Atis Slakteris Kuwait Alternate Governor Kaspars Gerhards Alternate Governor Abdulwahab Ahmed Al-Bader * Temporary <> Not a member of IFC # Not a member of IDA 312 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 313 Adviser Francis T. Karpeh Inguna Dobraja Toga McIntosh Emils Jakrins Steven Radelet Inese Liepina Dabah Varpilah Andris Liepins Libya Lebanon Governor Governor Abdulhafid Mahmoud Zlitni Mohamad Chatah Alternate Governor Alternate Governor Ali Ramadan Shnebesh Alain A. Bifani Adviser Adviser Omar Abu-Shaala Nadine Aboukhaled Mokhtar A. M. Ben Hamouda Kevork Hagop Baboyan Selim K. Selim Ihmouda Wafaa Charafeddine Saleh Ahmed Keshlaf Antoine Chedid Said Rashwan Marwan Francis Walid Haidar Lithuania # Mazen Soueid Alternate Governor Lesotho Ramune Vilija Zabuliene Governor Adviser Moeketsi Majoro Jurgita Kazlauskaite Lina Vanagiene Alternate Governor Audrius Zelionis Motena Tsolo Luxembourg Adviser Mosito Nicholas Khethisa Alternate Governor Nthoateng Cecilia Lebona Arsene Joseph Jacoby* Manong Lesoma Habofande Augustinus Makopela Adviser Malcolm Murray Marc Bichler David Mohlomi Rantekoa Jerome Hamilius Monaheng Seleteng Georges Heinrich Moepi Sematlane Serge Kolb Patrick Marquart Liberia Miguel Marques-Gomes Dirk Mevis Governor Guy Schuller Augustine Kpehe Ngafuan Jean-Louis Siweck Sandra Thein Alternate Governor Amara Konneh Macedonia, Former Yugoslav Republic of Adviser Governor Natty B. Davis Zoran Stavreski Vishal Gujadhur * Temporary <> Not a member of IFC # Not a member of IDA 313 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 314 Alternate Governor Alternate Governor Trajko Slaveski Ibrahim Mahaludin Puteh Adviser Adviser Petar Esmerov Noraini Abd Hamid Zoran Jolevski Ismail Hj Bakar Violeta Jovanoska Fawziah Begum Nadica Kostoska Mat Aron Deraman Martin Martinoski Isham Ishak Kristina Pavlovska Ilango Karuppannan Natasa Stojmanovska Johan Mahmood Merican Nik Edora Nik Ibrahim Madagascar Hayati Omar Kuppammal Ramasamy Governor Shahrol Anuwar Sarman Ivohasina Fizara Razafimahefa Suhaimi Tajuddin Rahamat Bivi Yusoff Alternate Governor Azrin Adlina Zainol Abidin Henri Bernard Razakariasa Maldives Adviser Honore Randrianarison Governor Sylvia Monique Rasoarilala Riluwan Shareef Christian Guy Dettriga Rasolomanana Mali Malawi Governor Ahmadou Abdoulaye Diallo Governor Goodall E. Gondwe Alternate Governor Inhaye Ag Mohamed* Alternate Governor Ken Lipenga Adviser Abdoulaye Daffe Adviser Abdoulaye Diop Charles S.R. Chuka Mariam Konate Singano Dalitso Kabambe Assitan Kouyate Jane Kambalame Mohamed Ouzouna Maiga Perks Master Ligoya Abdoulaye Toure Rhino Mchenga Aboubacar Alhousseyni Toure Kenna Mphonda Hawaye Toure Hawa Olga Ndilowe Idrissa Traore Elias E. Ngalande Boubacar Sidiki Walbani Levie Jeremiah Sato Rabson Shaba Malta # Ted Sitima-Wina Governor Malaysia Jason Azzopardi Governor Alternate Governor Wan Abdul Aziz Wan Abdullah Lino Mintoff * Temporary <> Not a member of IFC # Not a member of IDA 314 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 315 Adviser Moldova Lino Briguglio Mark Miceli Governor Mariana Durlesteanu Marshall Islands Alternate Governor Governor Eugeniu Cozmulici* Jefferson Barton Adviser Alternate Governor Nicolae Chirtoaca Jemi Nashion Mongolia Mauritius Governor Governor Batbayar Balgan Rama Krishna Sithanen Alternate Governor Alternate Governor Bolormaa Lkhagvasuren Ali Michael Mansoor Adviser Adviser Damba Baasankhuu Vinod Busjeet Davaasuren Damdinsuren Dhanandjay Goboodun Nyamaa Tumenbayar Hemraz Oopuddhye Jankee Denise Chin Ying Lan Hing Po Montenegro Joyker Nayeck Gowreesangkharsing Rajpati Governor Keerteecoomar Ruhee Igor Luksic Mexico Alternate Governor Milorad Katnic Governor Agustin Carstens Adviser Radica Zekovic Alternate Governor Ricardo Ochoa Rodriguez Morocco Jorge Familiar* Claudia Grayeb Bayata* Alternate Governor Gerardo Rodriguez Regordosa* Nizar Baraka Zouhair Chorfi* Adviser Jose A. Balbuena Adviser Rodrigo Brand Aicha Afifi Angel Manuel O'Dogherty Sabah Benchekroun Hector Samano Abdeslam Chebli Mohamed El Guerrouj Micronesia, Federated States of Khalid Guelzim Jaouad Hamri Governor Ali Lamrani Finley S. Perman Aziz Mekouar Fouzia Zaaboul Alternate Governor Rose Nakanaga * Temporary <> Not a member of IFC # Not a member of IDA 315 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 316 Mozambique Adviser Suresh Chandra Chalise Governor Madhav Prasad Ghimire Aiuba Cuereneia Prithivi B. Pande Radhesh Pant Alternate Governor Ashoke Rana Ernesto Gouveia Gove Anil Shah Adviser Netherlands Antonio Pinto de Abreu Fernando Felisberto Goenha Governor Maria Teresa Martins Wouter Bos Armando A. Panguene Luis Sitoe Alternate Governor Honorata Sulila-Black Bert Koenders Adriano Isaias Ubisse Rudolf Treffers* Myanmar Adviser Katja Berkhout Governor Macha Kemperman Myo Nwe David Johan Kuijper Jan Willem Le Grand Alternate Governor Wijnand Marchal Khin Thida Maw Dirk Jan Nieuwenhuis Kees-Jaap Ouwerkerk Adviser Kees Rade Myint Lwin Stephan Raes Kyaw Win Mark Timmermans Joris Herman van Dijk Namibia # Marjolein Van Milligen Andre Westerink Governor Herman Wijffels Peter H. Katjavivi New Zealand Alternate Governor Carl-Hermann G. Schlettwein Governor John Whitehead Adviser Uripurua Chris Hoveka Alternate Governor Julia Imene-Chanduru Jackie A. Frizelle Morven M. Luswenyo Patrick Nandago Adviser Cecilia Ndishishi Matthew Dalzell Bertha Njembo Rebekah Mawson Asoka Seneviratne Nicaragua Nepal Governor Governor Alberto Jose Guevara Obregon Babu Ram Bhattarai Alternate Governor Alternate Governor Antenor Rosales Bolanos Rameshore Prasad Khanal * Temporary <> Not a member of IFC # Not a member of IDA 316 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 317 Adviser Elin Rognlie Raul Barrios Haakon Smedsvig Arturo Cruz-Sequeira Narve Solheim Edward Jackson Anja Thomsen Ramon Perez Harald Tollan Ruth Salgado Bente Weisser Niger Oman Governor Governor Boubacar Moumouni Saidou Darwish bin Ismail Al Balushi Alternate Governor Alternate Governor Maman Ousmane Mohammed Jawad Sulaiman Adviser Adviser D. Maiga Toure Najeeb Al-Busaidi Ali Mohamed Redha Al-Haj Jaffar Nigeria Warith Al-Kharusi Hussain Malallah Al Lawati Governor M. Abiodun Alao Pakistan Alternate Governor Governor Haruna Mohammed Shaukat Fayaz Ahmed Tarin Abraham Nwankwo* Alternate Governor Adviser Farrakh Qayyum Oladele Bernard Akinrolabu Oluwasegun Ibidapo-Obe Adviser Paul Inape Izenuwa Husain Haqqani P. Odiachi Ashfaque Hasan Khan Abdulkareem Olabanji Olaoye Ebenezer Ayodele Omotoso Palau Larai Hajara Shuaibu Hamza Tahir Governor Sani Muhammed Zorro Marino Rechesengel Norway Alternate Governor Sally Techitong-Soalablai Alternate Governor Hakon Arald Gulbrandsen Panama Atle Leikvoll* Governor Adviser Hector E. Alexander Svein Aass Per Oyvind Bastoe Alternate Governor Sigrid Bay Aracelly Mendez* Tom Eriksen Leif Ervik Adviser Arvinn Eikeland Gadgil Jorge Mateo Milwood Allon Groth Beatriz Ordas de Rodriguez Ingrid Ofstad * Temporary <> Not a member of IFC # Not a member of IDA 317 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 318 Papua New Guinea Soledad Emilia J. de Jesus Cruz Rey Anthony David Governor Rosalia de Leon Leonard Wilson Kamit Ejercito Estrada Willy Calaud Gaa Alternate Governor Jesus Jacinto Aloysius Hamou Jose Edgar Ledonio Cecilia de Jesus Lee Adviser Jaime Lopez John Tuaim Hermilando Mandanas Thomas Marcelo Paraguay Aurelio Montinola, III Angelito Nayan Governor Erika Pulido Dionisio Borda Violeta Seva Carlos Sorreta Alternate Governor Edna Villa Manuel Vidal Caballero Gimenez Poland Adviser Francisco Ogura Governor Gustavo Ruiz Diaz Pawel Samecki Julio Taboada Alternate Governor Peru Jerzy Stopyra* Governor Adviser Luis Valdivieso Montano Monika Borowska-Massalska Michal Tomasz Krupinski Alternate Governor Sebastian Stolorz Jose Arista Arbildo Anna Trzecinska Adviser Portugal Roberto Abusada Salah Miguel Angel Ostos Rios Governor Jorge Gustavo Vega Nuno Sousa Pereira Philippines Alternate Governor Rosa Maria Caetano Governor Nuno Mota Pinto* Margarito B. Teves Adviser Alternate Governor Ana Carneiro Torres Ferreira Diwa C. Guinigundo Luis Manuel Bastos Quintaneiro Rolando Andaya* Luis Adriano Alberti Varennese Ralph G. Recto* Mendonca Maria Jose Vidal Adviser Edgardo J. Angara Qatar # Alfredo C. Antonio Ricardo Balbido, Jr. Governor Jimmy Blas Yousef Hussain Kamal Leonilo G. Coronel * Temporary <> Not a member of IFC # Not a member of IDA 318 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 319 Alternate Governor Eugene Miagkov Abdurahman Dashti Sergei Nosachev Konstantin Panov Adviser Alexey Proskuryakov Ali Bin Fahad Al-Hajri Andrei Serebriakov Rifaat K. Basanti Oksana Sergienko Mohamed Kabir Andrey Shinaev Fahad Kafoud Vasiliy Titov Lidia Nikolaevna Troshina Romania # Rwanda Governor Varujan Vosganian Governor James Musoni Alternate Governor Cristian Popa Adviser George Katureebe Adviser James Kimonyo Ana Georgia Babici Christian Shingiro Daniela Daraban Claudiu Grigoras Doltu St. Kitts and Nevis Russian Federation Governor Timothy Harris Governor Aleksei Kudrin Alternate Governor Janet Harris Alternate Governor Alexey G. Kvasov* Adviser Dmitry Pankin* Izben Williams Adviser St. Lucia Andrey Aleev Yulia Anikeeva Governor Andrei Bokarev Mark Louis Andrei Bugrov Vladimir Dashko Alternate Governor Timur Eyvazov Isaac Anthony Aleksei Fokin Aleksander Gorban Adviser German O. Gref Clenie Greer-Lacascade Nikolai Griko Michael Louis Vadim Grishin Nadezda Ivanova St. Vincent and the Grenadines <> Stanislav Katash Vladimir Khrebtov Alternate Governor Sergey Kislyak Laura Anthony-Browne Mikhail Korobkin Andrei Kostin Samoa Pavel Kuznetsov Dmitry Kvitko Governor Boris M. Lvin Hinauri Petana Andrey Matveev * Temporary <> Not a member of IFC # Not a member of IDA 319 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 320 Alternate Governor Ahmed A. Al Nassar Tekauita Lusia Sefo Saad Mohammed A. Al Nefaee Saeed Al-Qahtani Adviser Rashed Abdulaziz Al-Rashed Iulai Lavea Mansour Al-Saawi Jammaz Al-Suhaimi San Marino <># Sulaiman M. Al-Turki Sami Al-Yousef Governor Jitendra G. Borpujari Tito Masi Sami Ben Daamech Robert Eid Alternate Governor Said H. Hashim Luca Papi Richard R. Herbert Subodh Kumar Keshava Sao Tome and Principe Jean Marion Melhem F. Melhem Governor Abdulaziz A. O'Hali Angela M. Viegas Santiago Hutham S. Olayan Khaled Olayan Alternate Governor Lubna Olayan Americo Oliveira Khalid Oudghiri Aftab Qureshi Adviser Susan Jayne Akroyd Senegal Juan Carlos Vilanova Pardo Ovidio Pequeno Alternate Governor Mamadou Faye* Saudi Arabia Adviser Governor Djibril Camara Ibrahim A. Al-Assaf Souleymane Diallo Sogue Diarisso Alternate Governor Adama Diop Yousef I. Al-Bassam Gnoumka Toure Diouf Abdulrahman Mohammed Salem Merzoug Almofadhi* Fatoumata Binetou Ndao Amadou Lamine Ndiaye Adviser Diagna N'Diaye Ahmed Al-Balawie Birame Sene Hamad Al-Bazai Aly Sow Khaled M. A. Al-Fayez Massar Wague Suliman Al-Gwaiz Abdulrahman Al-Hamidy Serbia Abdullah I. Al-Hudaithi Abdullatif H. Al-Jaber Alternate Governor Fahad Aljuwaidi Diana Dragutinovic Mubarak Al-Khafra Abdulhamid Al-Khalifa Adviser Ahmed Al-Kholifey Biljana Chroneos-Krasavac Abdulrahman M. Al-Kudsi Bozidar Djelic Taha A. Al Kuwaiz Tatjana Isakovic Majid Al-Moneef Marija Rosic * Temporary <> Not a member of IFC # Not a member of IDA 320 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 321 Seychelles # Alternate Governor Peter Sevcovic Governor Danny Faure Adviser Andrej Droba Alternate Governor Marek Jakoby Beryl Shirley Samson* Martin Kaco Jana Kovacova Adviser Mario Vircik Peter Larose Jean-Maurice Parnet Slovenia Sierra Leone Alternate Governor Andrej Kavcic Governor Andrej Sircelj* David O. Carew Adviser Alternate Governor Ksenija Maver Sheku S. Sesay Metka Prevc Stanislava Zadravec-Caprirolo Adviser Abu Bangura Solomon Islands Osman Bangura Sheku Ahmed Bangura Governor James Comyn Snyder Rini Ibrahim Sorie Conteh Matthew Dingie Alternate Governor Sahr Lahai Jusu Shadrach Fanega Joseph Tekman Kanu James Sanpha Koroma Adviser Sheku Mesali Rick Nelson Houenipwela Winston Newman Samuels Allieu Sesay South Africa Singapore Governor Trevor Andrew Manuel Governor Tharman Shanmugaratnam Alternate Governor Elias Lesetja Kganyago Adviser Heng Chee Chan Adviser Sharon Wai Sum Chan Analisa Bala Mark Chin Kang Chen Lungisa Fuzile Frederick Choo Marlon Geswint Alvina Yishu Han Samantha Henkeman G. Jayakrishnan Reginald Dumisa Jele Seah Bee Leng Christopher Loewald Alvin C.T. Lim Jason Milton Wei Min Rosemary Lim Aaron Daniel Mminele Monde Mnyande Slovak Republic Dondo Andrew Mogajane Renosi Mokate Governor Ismail Momoniat Peter Kazimir Kurt Joseph Morais * Temporary <> Not a member of IFC # Not a member of IDA 321 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 322 Nhlanhla Nene Hazim Abdelgadir Ahmed Babiker Andre Frank Pillay Yousif Mohamed Bashir Cleo Rose-Innes Moses Mabior Deu Awul Michael Sachs Elmutasim Abdalla Ahmed Elfaki Gerrit van Schalkwyk Tarig Khalafalla Elkhidir Gamal Malik Ahmed Goraish Spain Abdalla Ibrahim Ali Ismail Oboy Ofilang Itorongodil Governor Omer El Faroug Sayed Kamil Pedro Solbes M. Akeec K.A. Khoc Emmanuel Bol Kuanyin Alternate Governor Salvatore Garang Mabiordit David Vegara Figueras Omer Mahgoub Suliman Hassan Ahamed Taha Adviser Rosario Casero Echeverri Swaziland Antonio Cordero Marta Garcia Jauregui Alternate Governor Maria Jesus Luengo Martin Dumisani E. Masilela Aurelio Martinez E. Agustin Navarro de Vicente-Gella Adviser Luis Orgaz Adelaide Sonile Gumbi Eulalia Agustina Ortiz Ephraim Mandla Hlophe Lindiwe Kunene Sri Lanka Khangeziwe Glory Mabuza Bhadala T. Mamba Governor Ndumiso Comfort Mamba Sarath Leelananda Bandara Zwelethu Minsi Amunugama Patrick Ben Ndzinisa Lonkhululeko Sibandze Alternate Governor Jaliya Wickremasuriya* Sweden Adviser Alternate Governor Yasoja Gunasekera Bjorn Fritjofsson* Seyed Zahir Moulana Joakim Stymne* Prabashini Ponnamperuma Aminda Rodrigo Adviser P Selvaraj Bjorn Blomberg Tissa Wijeratne Elin Carlsson Erik Eldhagen Sudan Ingemar Eriksson Christina Hartler Governor Torgny E.O. Holmgren Awad Ahmed Elgaz Mia Horn af Rantzien Stefan Isaksson Alternate Governor Pernilla Josefsson Lazo Lual A. Deng Anne-Charlotte Malm Ingrid Nilsson Adviser Susanna Nilsson Fatahelrahman Ali Per Trulsson Makki Mohammed Alian Ewa Wiberg * Temporary <> Not a member of IFC # Not a member of IDA 322 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 323 Switzerland Gerase Kamugisha Ngosha Said Magonya Governor Mwinyihaji Mwadini Makame Doris Leuthard Mwanaid Athumani Mtanda Charles K. Mutalemwa Alternate Governor E. Ombeni Sefue Jorg Giovanni Frieden* Ameir H. Sheha Michel Mordasini* Joseph Sokoine Stephen Wasira Adviser Olivier Burki Thailand Olivier Chave Emilija Georgieva Governor Henri Getaz Suchart Thada-Thamrongvech Christophe Hans Danielle Meuwly Monteleone Alternate Governor Manuel Sager Somchai Sujjapongse* Francoise Salame Pongpanu Svetarundra* Jakob Schaad Stephan Schmid Adviser Holger Tausch Acksiri Buranasiri Werner Weber Woravit Chailimpamontri Markus Zimmerli Pongsak Chajiamjan Urs Ziswiler Kannikar Chalitaporn Rapibhat Chandarasrivongs Syrian Arab Republic Pongsak Chewcharat Nipatsorn Kampa Governor Tachaphol Kanjanakul Adib Mayaleh Ampon Kittiampon Damrong Kraikruan Tajikistan Poowanida Kunpalin Sukuman Ladpli Governor Chakkrit Parapuntakul Safarali Najmuddinov Kaival Pongnontakul Khan Prachuabmoh Alternate Governor Soros Sakornvisava Matlubkhon Davlatov* Deepak Sarup Siribha Satayanon Adviser Kanit Sukonthaman Abdujabbor Shirinov Chularat Suteethorn Zavkidjon Zavkiev Benjarat Tanongsakmontri Apisak Tantivorawong Tanzania Kunteera Ujjin Pattrawan Vechasart Governor Porametee Vimolsiri Mustafa Haidi Mkulo Sun Vithespongse Songchai Wongwatcharadamrong Alternate Governor Philaslak Yukkasemwong Gray S. Mgonja Timor-Leste Adviser Abihudi Selemani Baruti Governor Audifax Aloise Choma Emilia Pires * Temporary <> Not a member of IFC # Not a member of IDA 323 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 324 Alternate Governor Turkey Joao Goncalves Governor Adviser Ibrahim H. Canakci Jorge Camoes Constancio Pinto Alternate Governor Joao Mariano Saldanha Memduh Aslan Akcay Togo Adviser Cihan Aktas Alternate Governor Serkan Ata Simfeitcheou Pre Birol Aydemir Ceyriye Aysoy Adviser Seyit Ahmet Bas Francis Dogo Erdem Basci Omer Bayar Tonga Besir Baymaz Tevfik Bilgin Governor Tahir Canatan `Otenifi Afu'alo Matoto Baris Cinar Hayrettin Demircan Alternate Governor Evren Dilekli `Aisake V. Eke Yusuf Bora Enhos Candan Ergen Trinidad and Tobago Mehmet Ali Ertunc Ekrem Mehmet Eskar Governor Ozgu Evirgen Karen Nunez-Tesheira Mehmet Haz Omer Karademir Alternate Governor Cigdem Kose Suzette Ann Marie Taylor Melih Nemli S. Elvan Ongun Adviser Ozgur Pehlivan Paul Christian Byam Suleyman Semdinoglu Ainsley Oswald Gill Mustafa Seven Samuel Aldwyn Martin Veysi Simsek Maurice Aurelius Suite, II Sibel Tokgoz Marina Valere Ibrahim Turhan Erhan Usta Tunisia Abdullah Yavas Mehmet Yener Governor Gunay Yesildoruk Mohamed Nouri Jouini Mehmet Yorukoglu Alternate Governor Turkmenistan # Kamel Ben Rejeb Governor Adviser Dovletgeldi Sadykov Tarek Ben Youssef Slaheddine Bouguerra Alternate Governor Ayech Bouselmi Gochmyrat A. Myradov Samir Chebil Farhad Khlif * Temporary <> Not a member of IFC # Not a member of IDA 324 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 325 Adviser Hamad Al Hurr Al Suwaidi Sapargeldy Annarejepov Bob Clarke Dovran Muradnazarov David Eldon Mered Bairamovich Orazov Dana Kadrie Suresh Muthukrishna Kumar Uganda Dalia Lahham Rich Pudner Governor Chirag Shah Ezra Suruma James Andrew Spindler Abdulshakoor Tahlak Alternate Governor Sanjay Uppal C. M. Kassami Mohammed Kamran Wajid Adviser United Kingdom Perezi Kamunanwire David Kihangire Governor Fred Muhumuza Douglas Alexander George Ndyamuba Charles Ssentongo Alternate Governor Martin Dinham* Ukraine Georgie Drummond* Stephen Field* Governor Josh Fleming* Hryhoriy Nemyrya Alexander Gibbs* Robert Murray Hills* Alternate Governor Stewart James* Anatoliy Maksyuta* Nicholas B. Joicey* Catherine Macleod* Adviser Susanna Moorehead* Volodymyr Fedorchuk Stephen John Pickford* Viktor Kapustin Vijay Pillai* Oleksandr Kupchyshyn Habib Nasser Rab* Volodymyr Lytvyn Hannah Elizabeth Robinson* Hennadii Nadolenko Daniel Rosenfield* Viktor Nikitiuk Jenny Scott* Oleksandr Pinskyi Nemat Talaat Shafik* Igor Rokhmanyuk James Ian Talbot* Oleh Shamshur Sally Taylor* Tamara Solyanyk Thomas Joseph Thornton* Mykola Udovychenko Lindsey Jennifer Whyte* Ihor Zhovkva Adviser United Arab Emirates Oliver Keetch Benedict Latto Governor Erica McAlpine Younis Haji AlKhoori Claire Moran Anthony Vigor Alternate Governor Kelly Wright Majed Ali Omran United States Adviser Mahmood Abdulrahim Abdulqader Governor Abdulla Al Awar Henry M. Paulson, Jr. Nasser Al Shaali * Temporary <> Not a member of IFC # Not a member of IDA 325 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 326 Alternate Governor Darius Mans Reuben Jeffery, III Nicholle Manz Gregory J. Berger* Anthony Marcus E. Whitney Debevoise* W. Larry McDonald Ana Guevara* Brookly Jean McLaughlin Neel Kashkari* Michael Metzler Robert Kimmitt* Eric Meyer Clay Lowery* Matthew Mohlenkamp Karen Mathiasen* Katherine Monahan David McCormick* Alexei Monsarrat Mark Sobel* Franklin Moore Daniel Sullivan* Richard Morford Liza Morris Adviser William C. Murden Katherine Janel Almquist David Nelson Andrew Baukol Adrian A. Ngasi Seth Howard Bleiweis Norman K. Nicholson Jonathan Bloom Malachy Nugent Edith R. Boehler Julie Nutter Ken Borghese Patrick M. O'Brien Virginia Brandon Brian O'Neill Stacy Carlson Francisco J. Parodi Susan M. Chun Parker M. Payne Benjamin Jared Cushman Daniel Walter Peters Nova Daly Traci Ann Phillips Michele Davis William Pizer Thomas Debass Sonja V. Renander Roland de Marcellus Marlene Sakaue Robert Dohner Robert W. Saliterman Jaroslav I. Dutkewych Briana Saunders Richard Figueroa Marguerite Siemer Henrietta Holsman Fore Aldo Sirotic Jamie Franco Andrew Snow David Freudenwald Patrick Stuart David Fulton Susan Thompson Earl Gast Luyen Doan Tran Timothy Goode Karen D. Turner Mathew P. Haarsager Beth Urbanas William Hammink Brooke Walker Maureen Harrington Amy Westling Michael Heath James Wilkinson Jeffery Hill David S. Williams John Hurley Jordan Winkler Dayna A. Hutchings Tsung-Tao Yang Julia Jacoby Rachel Jarpe Uruguay # David Kavanaugh William Laitinen Governor Judith S. Laufman Alvaro Garcia Rachel Leatham Stuart Levey Alternate Governor Bryan Matthew Lopp Azucena Arbeleche* * Temporary <> Not a member of IFC # Not a member of IDA 326 6135-CH07_p285-327.pdf 4/1/09 12:13 PM Page 327 Adviser Than Khac Nguyen Adrian Fernandez Thuy Thi Thu Nguyen Carlos Steneri Lap Pham Dang Van Thanh Uzbekistan Binh Phuong Tran Ly Hoai Van Governor Ravshan Gulyamov Yemen, Republic of Alternate Governor Governor Shukhrat Abdusha Vafaev Abdulkarim I. Al-Arhabi Adviser Alternate Governor Bakhtier Ibragimov Mutahar Abdulaziz Al-Abbasi Abdulaziz Kamilov Adviser Vanuatu Abdulwahab Al-Hajjri Fouad Al-Kohlany Governor Ibrahim Alnahari Sela Molisa Adonis Fakhri Galal Mohamed Moula Alternate Governor Nabil Shaiban Betty Zinner-Toa Zambia Venezuela, Republica Bolivariana de # Governor Governor Ng'andu Peter Magande Pedro Olveira Alternate Governor Adviser Danies Kawama Chisenda Asier Achutegui Ihonell Roland Campos Adviser Jose Ricardo Conde Martinez Pamela Kasese Bwalya Carlos Figueredo Samuel Bwalya Angelo Rivero-Santos Ngoza Beatra Chilonga Clara Rodriguez Chisala Kalaba Ben Kangwa Vietnam Inonge Mbikusita-Lewanika Situmbeko Musokotwane Governor Nawa Musiwa Muyatwa Xuan Ha Tran Michael Umbunda Mwaanga Willie Ndembela Alternate Governor Dang Anh Mai Zimbabwe Adviser Governor Binh Hoa Nguyen Machivenyika T. Mapuranga Bui Van Dung Phan Thi Thu Hien Alternate Governor Tran Xuan Huy Nicholas Mhute Huong Lan Nguyen Kim Xuyen Thi Nguyen Adviser Minh Tien Nguyen Alphios Ncube * Temporary <> Not a member of IFC # Not a member of IDA 327 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 328 ACCREDITED MEMBERS OF DELEGATIONS (MIGA) AT THE 2008 ANNUAL MEETINGS Afghanistan Australia Governor Governor Anwar ul-Haq Ahady Wayne Swan Alternate Governor Austria Wahidullah Shahrani Alternate Governor Albania Edith Frauwallner Marcus Heinz* Governor Ardian Fullani Azerbaijan Alternate Governor Alternate Governor Fatos Ibrahimi Ilqar Fatizada Algeria The Bahamas Governor Governor Karim Djoudi Hubert A. Ingraham Alternate Governor Alternate Governor Abdelhak Bedjaoui Colin Higgs* Antigua and Barbuda Kingdom of Bahrain Governor Governor Errol Cort Ahmed Bin Mohammed Al-Khalifa Alternate Governor Alternate Governor Whitfield Harris Yousif Abdulla Humood Argentina Bangladesh Governor Governor Carlos Fernandez A.B. Mirza Md. Azizul Islam Alternate Governor Barbados Martin Redrado Martin Abeles* Governor Pablo Barone* Darcy Boyce Armenia Alternate Governor Grantley W. Smith Governor Vahram Nercissiantz Alternate Governor Tigran Davtyan * Temporary 328 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 329 Belarus Cambodia Governor Governor Vladimir Amarin Aun Porn Moniroth Alternate Governor Alternate Governor Gennady Medvedev* Vissoth Vongsey Belgium Cameroon Governor Governor Bernard Andre Clerfayt Louis Paul Motaze Alternate Governor Alternate Governor Franciscus Godts Dieudonne Evou Mekou Bolivia Canada Governor Governor Carlos Villegas Quiroga James Michael Flaherty Alternate Governor Alternate Governor Luis Alberto Arce Catacora Margaret Biggs Thora Broughton* Bosnia and Herzegovina Antoine Brunelle Cote* Brendan Carley* Governor Adam Chambers* Nikola Spiric Nancy Clifford* John Davies* Botswana Graham Flack* Nathalie Gauthier* Governor Laird Hindle* Serwalo S.G. Tumelo Gary Holub* Diane Jacovella* Alternate Governor Anna Kwik* Boniface G. Mphetlhe Tiff Macklem* Steven McLaren* Bulgaria Chisholm Pothier* Steve Pugliese* Alternate Governor Jonathan Rothschild* Dimitar Kostov Samy Watson* Burkina Faso Cape Verde Alternate Governor Governor Lene Sebgo Cristina Duarte Burundi Central African Republic Governor Governor Clotilde Nizigama Sylvain Maliko Alternate Governor Alternate Governor Leon Nimbona Bendert Bokia * Temporary 329 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 330 Chad Costa Rica Governor Governor Ousmane Matar Breme Guillermo Zuniga Chaves Chile Alternate Governor Francisco de Paula Gutierrez Governor Carmen Maria Madriz Contreras* Andres Velasco Branes Cote d'Ivoire Alternate Governor Mario Campos* Governor Luis Cespedes Cifuentes* Paul Antoine Bohoun Bouabre Eric Parrado* Raul Saez* Alternate Governor Koffi Charles Diby China Kouame Kouassi* Alternate Governor Croatia Li Yong Xiaoxia Sun* Governor Wu Jianjun* Ivan Suker Yang Yingming* Xiaosong Zheng* Alternate Governor Zou Jiayi* Zdravko Maric Colombia Cyprus Governor Alternate Governor Oscar Ivan Zuluaga Kyriacos Kakouris* Leslie G. Manison* Alternate Governor Andreas Trokkos* Carolina Renteria Carolina Barco* Czech Republic Jorge Humberto Botero* Luis G. Echeverri* Governor Viviana Lara Castilla* Miroslav Kalousek Juan Pablo Zarate* Denmark Congo, Democratic Republic of the Governor Governor Ulla Toernaes Athanase Matenda Kyelu Alternate Governor Alternate Governor Ib Petersen Jean-Claude Masangu Mulongo Dominican Republic Congo, Republic of Governor Governor Juan Temistocles Montas Pierre Moussa Alternate Governor Alternate Governor Vicente Bengoa Albizu Pacifique Issoibeka * Temporary 330 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 331 Ecuador Alternate Governor Xavier Musca Governor Maria Elsa Viteri Acaiturri Gabon Arab Republic of Egypt Alternate Governor Christian Bongo Ondimba Governor Mahmoud Mohieldin Gambia, The Equatorial Guinea Governor Mousa G. Bala Gaye Governor Jose Ela Oyana Alternate Governor Mod A.K. Secka Alternate Governor Estanislao Don Malavo Georgia Estonia Governor Nika Gilauri Governor Ivari Padar Germany Alternate Governor Governor Martin Poder* Heidemarie Wieczorek-Zeul Ethiopia Alternate Governor Michael Hofmann* Governor Adolf Kloke-Lesch* Sufian Ahmed Klaus D. Stein* Ruediger Von Kleist* Alternate Governor Stephan von Stenglin* Abi Woldemeskel Bayou Juergen Zattler* Fiji Ghana Governor Alternate Governor Peceli V. Vocea Anthony Akoto Osei Alternate Governor Greece Sanjay Rohit Prasad* Governor Finland George A. Provopoulos Alternate Governor Grenada Peter Nyberg Velipekka Nummikoski* Governor Marjatta Rasi* V. Nazim Burke France Alternate Governor Timothy Antoine Governor Christine Lagarde * Temporary 331 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 332 Guatemala Madhusudan Prasad* Arvind Virmani* Alternate Governor Juan Alberto Fuentes Iran, Islamic Republic of Guinea Governor Seyyed Shams Al-din Hosseini Governor Ousmane Dore Iraq Alternate Governor Governor Djigui Camara Baker J. Al-Zubaidy Guinea-Bissau Ireland Governor Alternate Governor Carlos Mussa Balde Donal Cahalane* Carmel Keane* Guyana Marianne Nolan* Michael J. Somers* Alternate Governor Ashni Singh Italy Haiti Governor Mario Draghi Governor Daniel Dorsainvil Jamaica Alternate Governor Governor Charles Castel Audley Shaw Honduras Alternate Governor Wesley George Hughes Governor Rebeca Patricia Santos Japan Alternate Governor Governor Edwin Araque Bonilla H.E. Shoichi Nakagawa Hungary Alternate Governor Daikichi Momma* Alternate Governor Takehiko Nakao* Zsuzsanna Varga Toru Shikibu* Naoyuki Shinohara* Iceland Masato Watanabe* Alternate Governor Jordan Arni M. Mathiesen Governor India Suhair Al-Ali Alternate Governor Alternate Governor Ashok Chawla Ghaith Zureiqat * Temporary 332 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 333 Kazakhstan Liberia Governor Governor Galymzhan Pirmatov Augustine Kpehe Ngafuan Kenya Alternate Governor Amara Konneh Alternate Governor Joseph Kanja Kinyua Socialist People's Libyan Arab Jamahiriya Korea, Republic of Governor Governor Abdulhafid Mahmoud Zlitni Man Soo Kang Alternate Governor Alternate Governor Ali Ramadan Shnebesh Seongtae Lee Lithuania Kuwait Alternate Governor Alternate Governor Ramune Vilija Zabuliene Bader Mohamed Al-Saad Macedonia, Former Yugoslav Kyrgyz Republic Republic of Governor Governor Tadjikan B. Kalimbetova Zoran Stavreski Alternate Governor Alternate Governor Azamat S. Dikambaev Trajko Slaveski Lao, People's Democratic Republic Madagascar Governor Governor Viengthong Siphandone Ivohasina Fizara Razafimahefa Alternate Governor Alternate Governor Thipphakone Chanthavongsa Henri Bernard Razakariasa Latvia Malawi Governor Governor Atis Slakteris Goodall E. Gondwe Alternate Governor Alternate Governor Kaspars Gerhards Ken Lipenga Lesotho Malaysia Governor Governor Timothy T. Thahane Wan Abdul Aziz Wan Abdullah Alternate Governor Alternate Governor Moeketsi Majoro Ibrahim Mahaludin Puteh * Temporary 333 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 334 Mali Namibia Governor Governor Ahmadou Abdoulaye Diallo Carl-Hermann G. Schlettwein Mauritius Nepal Governor Governor Rama Krishna Sithanen Babu Ram Bhattarai Alternate Governor Alternate Governor Ali Michael Mansoor Rameshore Prasad Khanal Radhakrishna Chellapermal* Netherlands Micronesia, Federated States of Governor Governor Wouter Bos Finley S. Perman Alternate Governor Alternate Governor Bert Koenders Rose Nakanaga Rudolf Treffers* Moldova New Zealand Alternate Governor Governor Eugeniu Cozmulici* John Whitehead Mongolia Alternate Governor Jackie A. Frizelle Governor Batbayar Balgan Nicaragua Alternate Governor Governor Bolormaa Lkhagvasuren Alberto Jose Guevara Obregon Montenegro Alternate Governor Antenor Rosales Bolanos Governor Igor Luksic Nigeria Alternate Governor Governor Milorad Katnic Sanusi Daggash Mozambique Norway Governor Alternate Governor Aiuba Cuereneia Hakon Arald Gulbrandsen Atle Leikvoll* Alternate Governor Ernesto Gouveia Gove Oman Governor Darwish bin Ismail Al Balushi * Temporary 334 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 335 Alternate Governor Portugal Hani Daood Al Bahrani Governor Pakistan Nuno Sousa Pereira Governor Alternate Governor Waqar Masood Khan Rosa Maria Caetano Nuno Mota Pinto* Palau Qatar Governor Marino Rechesengel Governor Yousef Hussain Kamal Alternate Governor Sally Techitong-Soalablai Alternate Governor Abdullah Bin Soud Al-Thani Papua New Guinea Romania Governor Aloysius Hamou Governor Varujan Vosganian Paraguay Alternate Governor Governor Cristian Popa Dionisio Borda Russian Federation Alternate Governor Manuel Vidal Caballero Gimenez Governor Aleksei Kudrin Peru Alternate Governor Governor Alexey G. Kvasov* Luis Valdivieso Montano Dmitry Pankin* Alternate Governor Rwanda Jose Arista Arbildo Governor Philippines James Musoni Governor St. Kitts and Nevis Margarito B. Teves Governor Alternate Governor Timothy Harris Rolando Andaya* Ralph G. Recto* Alternate Governor Janet Harris Poland St. Lucia Governor Michal Baj Governor Mark Louis * Temporary 335 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 336 Alternate Governor Alternate Governor Isaac Anthony Shadrach Fanega St. Vincent and the Grenadines South Africa Alternate Governor Governor Laura Anthony-Browne Trevor Andrew Manuel Samoa Alternate Governor Elias Lesetja Kganyago Governor Nickel Lee Hang Spain Alternate Governor Governor Iosefo Bourne Pedro Solbes M. Saudi Arabia Alternate Governor David Vegara Figueras Governor Ibrahim A. Al-Assaf Sri Lanka Alternate Governor Governor Yousef I. Al-Bassam Sarath Leelananda Bandara Abdulrahman Mohammed Amunugama Almofadhi* Alternate Governor Serbia Jaliya Wickremasuriya* Alternate Governor Sudan Diana Dragutinovic Governor Sierra Leone Awad Ahmed Elgaz Governor Alternate Governor David O. Carew Lual A. Deng Alternate Governor Swaziland Sheku S. Sesay Alternate Governor Singapore Mbuso C. Dlamini Governor Sweden Tharman Shanmugaratnam Alternate Governor Slovenia Bjorn Fritjofsson* Joakim Stymne* Alternate Governor Andrej Kavcic Switzerland Andrej Sircelj* Governor Solomon Islands Raymund A. Furrer Governor Alternate Governor Snyder Rini Michel Mordasini* * Temporary 336 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 337 Tajikistan Alternate Governor Memduh Aslan Akcay Alternate Governor Matlubkhon Davlatov* Turkmenistan Tanzania Alternate Governor Gochmyrat A. Myradov Governor Mustafa Haidi Mkulo Uganda Alternate Governor Governor Gray S. Mgonja Ezra Suruma Thailand Alternate Governor C. M. Kassami Governor Suchart Thada-Thamrongvech Ukraine Alternate Governor Governor Somchai Sujjapongse* Hryhoriy Nemyrya Pongpanu Svetarundra* United Kingdom Timor-Leste Governor Governor Douglas Alexander Emilia Pires Alternate Governor Alternate Governor Martin Dinham* Joao Goncalves Georgie Drummond* Stephen Field* Togo Josh Fleming* Alexander Gibbs* Alternate Governor Robert Murray Hills* Simfeitcheou Pre Stewart James* Nicholas B. Joicey* Trinidad and Tobago Catherine Macleod* Susanna Moorehead* Governor Stephen John Pickford* Karen Nunez-Tesheira Vijay Pillai* Habib Nasser Rab* Tunisia Hannah Elizabeth Robinson* Daniel Rosenfield* Governor Jenny Scott* Mohamed Nouri Jouini Nemat Talaat Shafik* James Ian Talbot* Alternate Governor Sally Taylor* Kamel Ben Rejeb Thomas Joseph Thornton* Lindsey Jennifer Whyte* Turkey United States Governor Ibrahim H. Canakci Governor Henry M. Paulson, Jr. * Temporary 337 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 338 Alternate Governor Venezuela, Republica Bolivariana de Reuben Jeffery, III Gregory J. Berger* Alternate Governor E. Whitney Debevoise* Pedro Olveira Ana Guevara* Michael Kaplan* Vietnam Neel Kashkari* Clay Lowery* Governor Karen Mathiasen* Xuan Ha Tran David McCormick* Mark Sobel* Alternate Governor Dang Anh Mai Uruguay Yemen, Republic of Governor Alvaro Garcia Governor Abdulkarim I. Al-Arhabi Alternate Governor Azucena Arbeleche* Alternate Governor Mutahar Abdulaziz Al-Abbasi Uzbekistan Zambia Alternate Governor Murat Yakubjanov Governor Ng'andu Peter Magande Vanuatu Zimbabwe Governor Sela Molisa Governor Machivenyika T. Mapuranga Alternate Governor Betty Zinner-Toa Alternate Governor Willard L. Manungo * Temporary 338 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 339 OBSERVERS AT THE 2008 ANNUAL MEETINGS Abu Dhabi Fund for Development African Union Shabeeb Al Darmaki Erastus J.O. Mwencha Bankole Adeoye African Development Bank Group Amina Salum Ali Louise Bailey Donald Kaberuka Elham Mahmoud Ahmed Ibrahim Mimi Alemayehou Julius Kagamba Thierry de Longuemar Seraphine Manirambona Augustin Flory Richard M. Mkandawire Abdulmajed Gadad Golmame Tefera Patrick Claude Giraud Rhoda Tumusiime Louis A. Kasekende Olukorede Willoughby Frederic Assomption Korsaga Moctar O.A. Yedaly Gantsho Mandla S.V. Onike Nicol-Houra Andean Development Corporation Monojeet Pal Alex Rugamba Enrique Garcia Preeti Sinha Felix Bergel Peter Sinon Luis Miguel Castilla Graham Murray Stegmann Carolina Espana Timothy Turner Gabriel Felpeto Tetsuya Utamura Alejandro Gumucio Pierre Nicolas van Peteghem Hugo Sarmiento Yogesh Vyas Magatte Wade Arab Bank for Economic Development Rolf B. Westling in Africa Azagne George Ebe Ould Ebe African Export-Import Bank Arab Fund for Economic and Social Jean-Louis Ekra Development Samuel Mugoya Benedict O. Oramah Abdlatif Y. Al-Hamad Husam Omar Khalil African Fund for Guarantee and Economic Cooperation Arab Monetary Fund Jassim Abdulla Al-Mannai Magaye Gaye Yisr Burnieh Maman-Lawal Mossi Bagoudou Asian Development Bank African Trade Insurance Agency Haruhiko Kuroda Peter M. Jones Shyam Bajpai Astere Girukwigomba Indu Bhushan Israel Kamuzora Roger Burston Omingo Magara Seethapathy Chander Cyprien Sakubu Thelma Diaz * Temporary 339 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 340 Toshimasa Dojima Center for Latin American Monetary Katherine M. Ferrey Studies Charles Greenwood Shuichi Hosoda Monetary Studies Mikio Kashiwagi Kenneth G. Coates Masahiro Kawai Adriana Alverde Maria Teresa Kho Corina Arteche Bindu N. Lohani Luiz Barbosa Dan Millison Jaime Osvaldo Coronado Kazu Sakai Maria Luisa Gutierrez Naoki Sakai Robert Schoellhammer Central African Economic Woochong Um and Monetary Community Bank for International Settlements Hassan Adoum Bakhit Benoit Ketchekmen Herve Hannoun Gavin Bingham Central African States Development Peter Dittus Bank Hermann Greve Guenter Anton Pleines Anicet G. Dologuele Bruno Tissot Oscar Ngole BIS-Financial Stability Forum Central American Bank for Economic Integration Svein Andresen Patrizia Baudino Nick Rischbieth Marina Moretti Hernan Danery Alvarado Yu-Yuan Hou Black Sea Trade and Development Bank Jose Felix Magana Alejandro Jose Rodriguez Zamora Hayrettin Kaplan Ersen Ekren Central American Monetary Council Andrei Kondakov George Kottas Alfredo Blanco William Calvo V. Caribbean Community Common Fund for Commodities Edwin W. Carrington Fay Ingrid Housty Ali Mchumo Carl Greenidge Javed Akhtar David F. Hales Common Market for Eastern Caribbean Development Bank and Southern Africa Compton Bourne Sindiso Ngwenya Patrick Desmond Brunton Tidenekialesh Asfaw Ian Durant Alex Gitari Kwimenya Carl Howell Michael Gondwe Denny Lewis-Bynoe Carol Jilombo Warren Smith Kombo James Moyana Tessa Williams-Robertson Cris M. Muyunda * Temporary 340 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 341 Commonwealth Secretariat Johann Peter Art Lankes Isabelle Laurent Indrajit Coomaraswamy Peter Reiniger Vasantt Kumar Jogoo Manfred J. Schepers Jonathan Ockenden Josue Tanaka Constance Elizabeth Vigilance Nicholas Tesseyman Axel Van Nederveen Cooperation Council for the Arab Anthony Robert Williams States of the Gulf Marian Dalton Julie Green Nasser Ibrahim Al-Kaud European Central Bank Council of Europe Development Bank Jean-Claude Trichet Raphael Alomar Elisabeth Ardaillon-Poirier Jacques Mirante Pere Lorenzo Bini Smaghi Thierry Poirel Ricardo Llaudes Apolonio Ruiz Ligero Frank Moss Luca Schio Lucas D. Papademos Imre Tarafas Georges Pineau Francisco Ramon-Ballester East African Development Bank Raymond Ritter Regina Karoline Schueller Godfrey B. Tumusiime Juergen Stark Mahesh K. Kotecha Joerg Stephan Agnese de Leo Economic Community of West Michele Kirstetter African States European Commission Mohammed Ibn Chambas Christian N. Adovelande Joaquin Almunia Lambert N'galadjo Bamba Louis Michel Remi Gbaguidi Moreno Bertoldi Comla Kadje Marco Buti David Lansana Bockari Kamara Elisabetta Capannelli Nelson O. Magbagbeola Antonio de Lecea Mercedes Mensah Servaas Deroose Mohamed Ben Omar Ndiaye Geraldine Dufort Ousseini Salifou Karin Gardes-Koutny Thierno Bocar Tall Peter Kerstens Despina Manos Economic Cooperation Organization Amy Medearis Nigel Nagarajan Murat Ulus Angelos Pangratis Omer Faruk Baykal Bernard Petit Nadeem Karamat Maciej Popowski Loukas Stemitsiotis European Bank for Reconstruction Mattias Sundholm and Development Heliodoro Temprano Arroyo Gerassimos Thomas Thomas Mirow Benedicte van den Berg Alex Auboeck Vlassia Vassikeri Erik Berglof Luc Veron Olivier Descamps Benjamin Pearson * Temporary 341 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 342 European Investment Bank Group Development Barbara Bargagli-Petrucci Lennart Bage Sophie Billon Uday Abhyankar Martin Curwen Cheryl Morden Carlos da Silva Costa Thomas Pesek Philippe de Fontaine Vive Matthew Wyatt Bertrand de Mazieres Bonnie Lynn Harris Thomas Hackett Plutarchos Sakellaris International Labour Organization Fiona Turner Juan Somavia Food and Agriculture Organization Marina Colby of the United Nations Philippe Egger Armand Pereira Hafez M.H. Ghanem Stephen Pursey Daniel J. Gustafson Keith Wiebe Islamic Development Bank Inter-American Development Bank Rami Ahmad Khaled M. Al-Aboodi Luis Alberto Moreno Mejia Ghassan Youssef Al-Baba Amal-Lee Amin Abdul Aziz M. Zahir Al Hinai Edward Bartholomew Ghada Attieh Hugo Eduardo Beteta Mendez-Ruiz Aftab A. Cheema Otaviano Canuto Amadou Boubacar Cisse Susana Cardenas Sirelkhatim Sidahmed Winston Cox Musa Hassan Sillah Soren Elbech Nijad Subei Luis Alberto Giorgio Sidi Mohamed Ould Taleb Gerard S. Johnson Salah Ameur Jelassi Robert Kaplan Lori Kerr Islamic Financial Services Board Santiago Levy Eduardo Lora Rifaat Ahmed Abdel Karim Angela Marcarino Paris Farrah Mohamed Aris Hilen Meirovich Santiago Pastrana Kosovo Steven Puig German Quintana Ahmet Shala Bruno Walter Coelho Saraiva Gani Gerguri Hans Schulz Ilir Ibrahimi Desmond Thomas Hajdar Korbi Carla Tully Driton Qehaja Daniel M. Zelikow Arie Rabfogel Hashim Rexhepi IADB-Inter-American Investment Corporation Kuwait Fund for Arab Economic Development Orlando Ferreira Caballero Steven Reed Osama Alattal Carlos Roa International Fund for Agricultural * Temporary 342 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 343 Latin American Association of Klaus Schmidt-Hebbel Development Financing Institutions Sandra Wilson Rommel Acevedo OECD-Development Assistance Ricardo Palma-Valderrama Committee Latin American Reserve Fund Eckhard Deutscher James Michel Rodrigo Bolanos Zamora Jens Sedemund Ana Maria Carrasquilla Juan Carlos Alfaro Organization of American States Iker Zubizarreta Victoria Abalo League of Arab States Irene Klinger Joaquin Salcedo Ashraf Riad Organization of the Petroleum Nordic Investment Bank Exporting Countries Johnny Akerholm Mohammad Alipour-Jeddi Lars Eibeholm Nils Erik Emilsson Pacific Islands Forum Secretariat Jens Hellerup Hilde Kjelsberg Sanjesh Naidu Kari Kukka Harro Pitkanen P. L. O. Heidi Susanne Syrjanen Jihad Al Wazir OPEC Fund for International Aziz Abu-Dagga Development Samir Abdullah Ali Mazen Saleem Jadallah Suleiman Jasir Al-Herbish Mohammad Shtayyeh Said Aissi Jamilah Shami Fuad Albassam Anajulia Taylhardat de Tarter Southern African Development Helen Abu Jurji Community Ranya Nehmeh Angelo Eduardo Mondlane Organisation for Economic Co-operation and Development United Nations Angel Gurria Susan Bajardi Richard H. Carey Suzanne Bishopric Carolyn Ervin Farooq Chowdhury Susan Fridy Hazem Fahmy Stephen Paul Groff Manuel F. Montes Ian Hawkesworth Daniel Platz Brenda Killen Frank Schroeder Jean-Marie LeGrand David Smith Kaori Miyamoto Jomo Kwame Sundaram Gabriela Ramos Richard Tyner Holly Richards Rob Peter Vos Javier Santiso * Temporary 343 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 344 United Nations Children's Fund West African Monetary Institute Bjorn Gillsater Temitope Oshkioya Emmanuel Terlumun Adamgbe United Nations Conference on Trade and Development Turkey Planning Team 2009 Annual Meetings Heiner Flassbeck Cavit Dagdas United Nations Development Nurettin Akkaya Programme Mustafa Soner Aksu Cemil Mehmet Arslan Kemal Dervis Onur Ataoglu Paolo Galli Abdurrahman Atmaca Magnus Magnusson Nihal Aydogan Ad Melkert Senay Aydogan Rosemary Nuamah Mevlut Bulut Frederick S. Tipson Hasan Canpolat Marissa Ayento Simge Colakoglu Mehmet Comcuoglu United Nations Economic Commission Yavuz Delice for Africa Ebru Ejder Ozkan Eker Abdoulie Janneh Huseyin Eren Kasirim Nwuke Caner Esentur Levent Gulsoy United Nations Economic Commission Hakan Gurgen for Latin America and the Caribbean Aydin Haskebabci Ilhan Kara Ines Bustillo Dilek Karragac Helvia Velloso Ayse Keten Hatice Kokden United Nations Industrial Development Ayhan Kurtoglu Organization Erol Kuzubasioglu Didem Emine Mutlay H. Stephen Halloway Ayhan Mutlu Zeynep Okyay West African Development Bank Hatice Camay Ozalp Ozgur Ozaslan Abdoulaye Bio Tchane Ula Pacali Amadou Oumar Mballo Saadettin Parmaksiz Mesut Pektas West African Economic and Monetary Mehmet Ali Saglam Union Hasan Sahinkaya Ercan Tanrisal Soumaila Cisse Levent Ulku Abdoulaye Diop Mustafa Ustun Eloge Houessou Feza Faruk Ustunkaya Felix Bruno Kafando Seray Yilmaz Gullu Yilmazturk * Temporary 344 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 345 EXECUTIVE DIRECTORS AND ALTERNATES IBRD, IFC, IDA October 12, 2008 Alternate Executive Executive Directors Directors Svein Aass Jens Haarlov (Norway) (Denmark) Abdulrahman Almofadhi Abdulhamid Al-Khalifa (Saudi Arabia) (Saudi Arabia) Gino Alzetta Melih Nemli (Belgium) (Turkey) Felix Alberto Camarasa Francisco Bernasconi (Argentina) (Chile) E. Whitney Debevoise Ana Guevara (United States) (United States) Mat Aron Deraman Chularat Suteethorn (Malaysia) (Thailand) Jorge Familiar Jose A. Rojas (Mexico) (Republica Bolivariana de Venezuela) Ambroise Fayolle Frederick Jeske-Schonhoven (France) (France) Jim Hagan Do-Hyeong Kim (Australia) (Republic of Korea) Merza H. Hasan Mohamed Kamel Amr (Kuwait) (Arab Republic of Egypt) Michael Hofmann Ruediger Von Kleist (Germany) (Germany) Mulu Ketsela Mathias Sinamenye (Ethiopia) (Burundi) Dhanendra Kumar Zakir Ahmed Khan (India) (Bangladesh) Alexey G. Kvasov Eugene Miagkov (Russian Federation) (Russian Federation) Giovanni Majnoni Nuno Mota Pinto (Italy) (Portugal) 345 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 346 Alternate Executive Executive Directors Directors Susanna Moorehead Stewart James (United Kingdom) (United Kingdom) Michel Mordasini Michal Tomasz Krupinski (Switzerland) (Poland) Louis Philippe Ong Seng Agapito Mendes Dias (Mauritius) (Sao Tome and Principe) Toru Shikibu Masato Kanda (Japan) (Japan) Rogerio Studart Jorge Humberto Botero (Brazil) (Colombia) Javed Talat Sid Ahmed Dib (Pakistan) (Algeria) Samy Watson Ishmael Lightbourne (Canada) (The Bahamas) Herman Wijffels Claudiu Grigoras Doltu (The Netherlands) (Romania) Zou Jiayi Yang Yingming (People's Republic of China) (People's Republic of China) 346 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 347 DIRECTORS AND ALTERNATES MIGA October 12, 2008 Directors Alternate Directors Svein Aass Jens Haarlov (Norway) (Denmark) Abdulrahman Mohammed Almofadhi Abdulrahman Mohammed Almofadhi (Saudi Arabia) (Saudi Arabia) Gino Alzetta Melih Nemli (Belgium) (Turkey) Felix Alberto Camarasa Francisco Bernasconi (Argentina) (Chile) E. Whitney Debevoise Ana Guevara (United States) (United States) Mat Aron Deraman Chularat Suteethorn (Malaysia) (Thailand) Jorge Familiar Jose A. Rojas (Mexico) (Republica Bolivariana de Venezuela) Ambroise Sixte Armel Francois Frederick Jeske-Schonhoven (France) (France) Jim Hagan Do-Hyeong Kim (Australia) (Republic of Korea Merza H. Hasan Mohamed Kamel Amr (Kuwait) (Arab Republic of Egypt) Michael Hofmann Ruediger Von Kleist (Germany) (Germany) Mulu Ketsela Mathias Sinamenye (Ethiopia) (Burundi) Dhanendra Kumar Zakir Ahmed Khan (India) (Bangladesh) Alexey G. Kvasov Eugene Miagkov (Russian Federation) (Russian Federation) Giovanni Majnoni Nuno Mota Pinto (Italy) (Portugal) 347 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 348 Directors Alternate Directors Susanna Moorehead Stewart James (United Kingdom) (United Kingdom) Michel Mordasini Jakub Karnowski (Switzerland) (Poland) Louis Philippe Ong Seng Agapito Mendes Dias (Mauritius) (Sao Tome and Principe) Toru Shikibu Michihiro Kishimoto (Japan) (Japan) Rogerio Studart Jorge Humberto Botero (Brazil) (Colombia) Javed Talat Sid Ahmed Dib (Pakistan) (Algeria) Samy Watson Ishmael Lightbourne (Canada) (The Bahamas) Herman Wijffels Claudiu Grigoras Doltu (The Netherlands) (Romania) Zou Jiayi Yang Yingming (People's Republic of China) (People's Republic of China) 348 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 349 OFFICERS OF THE BOARDS OF GOVERNORS IBRD, IFC AND IDA AND JOINT PROCEDURES COMMITTEE FOR 2008­2009 Chairman. . . . . . . . . . . . . . . . . . . . . Vietnam Vice Chairmen . . . . . . . . . . . . . . . . Lithuania Tunisia Reporting Member . . . . . . . . . . . . . Liberia Members . . . . . . . . . . . . . . . . . . . . . The Bahamas China Côte d'Ivoire Czech Republic Djibouti France Germany Haiti India Iraq Japan Liberia Lithuania Montenegro New Zealand Nigeria Saudi Arabia Spain Tunisia United Kingdom United States Uzbekistan Vietnam 349 6135-CH08_p328-350.pdf 4/1/09 12:13 PM Page 350 OFFICERS OF THE MIGA COUNCIL OF GOVERNORS AND PROCEDURES COMMITTEE FOR 2008­2009 Chairman. . . . . . . . . . . . . . . . . . . . . Vietnam Vice Chairmen . . . . . . . . . . . . . . . . Lithuania Tunisia Reporting Member . . . . . . . . . . . . . Liberia Members . . . . . . . . . . . . . . . . . . . . . The Bahamas China Côte d'Ivoire Czech Republic Djibouti France Germany Haiti India Iraq Japan Liberia Lithuania Montenegro New Zealand Nigeria Saudi Arabia Spain Tunisia United Kingdom United States Uzbekistan Vietnam 350