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Argentina and the IMF

United Kingdom and the IMF

India and the IMF

Turkey and the IMF

United States and the IMF

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Transcript of a Press Conference After a Joint Meeting of the
The International Monetary and Financial Committee of the IMF
And the Development Committee of the World Bank

Sunday, April 29, 2001
Washington, D.C.


Participants:

Yashwant SINHA, Finance Minister of India and Chairman, Development Committee of the World Bank

Gordon BROWN, Chancellor of the Exchequer of the United Kingdom and Chairman, International Monetary and Financial Committee of the IMF

James WOLENSOHN, President, World Bank

Stanley FISCHER, First Deputy Managing Director, IMF

Caroline ANSTEY, Chief, Media Relations, World Bank

Proceedings:

MS. ANSTEY: Welcome to the press conference for the joint meeting of the International Monetary and Financial Committee of the IMF and the World Bank's Development Committee. Let me introduce you to the panel. To my right is Jim Wolfensohn, president of the World Bank. To his right is Yashwant Sinha, Finance Minister of India, who is also the chairman of the Development Committee. To his right is Gordon Brown, Chancellor of the Exchequer of the United Kingdom and the Chairman of the IMFC, and to his right is Stanley Fischer, First Deputy Managing Director of the IMF. Thank you. I think we shall call on Mr. Sinha to say a few words, then followed by Mr. Brown.

MR. SINHA: Thank you. Ladies and gentlemen, we met for an hour and 45 minutes in a joint meeting of the IMFC and the Development Committee. Apart from Gordon Brown and myself, 22 speakers took part in the discussions. At the end, we adopted a communique that is available to you.

While we discussed the issue of strengthening growth and fighting poverty in the developing countries, the emphasis in this meeting was clearly on the HIPC countries and largely, therefore, on Africa. We took note of the visit of the president of the World Bank and the Managing Director of the IMF, who visited Africa jointly. They held discussions with the African leadership and at the end of it they addressed communications to Chancellor Brown and to myself in our respective capacities. That was a very important input for the discussions this afternoon.

On all of the issues that we had before us on the agenda, we have received some very valuable insight and very valuable advice with regard to our future direction. I think the world community is completely committed to the processes of poverty reduction and growth, to debt forgiveness, to enhanced flows of official development assistance, to peace and conflict resolution, and to the question of better market access for the products of the developing countries, especially the HIPC countries to all markets, especially the markets of the developed countries.

So these were the issues that we discussed, and as I said, the discussions have provided us with our future direction. I would like to end by saying that the joint meeting has been extremely useful, and once again I think the world community has come together to reconfirm, reaffirm, reiterate its commitment to poverty reduction in the developing countries and especially in Africa. I would like to pass on to Gordon Brown who will now address you.

MR. BROWN: I think you'll find the communique is the strongest statement yet that what we can achieve together—developed countries and developing countries, IMF and World Bank—is so much greater than we can achieve on our own, and to achieve it not simply for debt relief as we move forward with that program. By creating a virtuous circle of debt reduction, poverty reduction, sustainable development, we can meet the 2015 international development targets to which we have all subscribed, World Bank, IMF, and individual countries.

I think you will see in the communique also a recognition of the importance of the resumption of the multilateral trade talks so that we can open up markets to developing countries in a way that has not been done before. Almost all the speakers around the table emphasized that point, the importance of the development aid budgets, the importance we attach to the Poverty Reduction Strategy Papers and the praise we give to IMF and World Bank cooperation to make these an essential instrument of poverty reduction and development.

We looked at the issue of debt, and we are of the view that the sustainable exit from debt burdens should not be undermined by changes in the terms of trade or by our inability to bring together a post-conflict program or indeed by the financing available to the institutions themselves. I believe we are resolved that we must look carefully at these issues and ensure that we can build on the 22 countries that have achieved debt relief, make sure that that position for them is sustainable. Equally, we need to add additional countries, and particularly, of course, we are concerned about the eleven post-conflict countries that so far cannot benefit from debt relief, as well as those countries still facing conflicts.

There was one other area where I think we are in agreement as well. To meet the 2015 targets there will have to be a special emphasis on education and on health. The IMFC communique this afternoon draws attention to the Dakar commitments on education. You can see in the statements that have been made today by a number of countries the interest that is now growing in a health initiative that can tackle the problems not simply of HIV/AIDS but the problems of tuberculosis and malaria, which are responsible for more than four million deaths, most of them unnecessary and avoidable deaths around the world each year. I believe that we will see in the next few weeks and months a new initiative on health that will bring together the international organizations, individual countries including G-7 countries, and perhaps also the private sector. I think there was a recognition today that just as prosperity is indivisible, the reduction of poverty is a duty for us all.

MS. ANSTEY: Thank you. I'm going to throw it open to questions now.

QUESTION: Can you give us some idea of the health fund, exactly how much is it going to be, and how is it going to be run? Who is going to run it? Will it be the World Bank or some other multilateral organization?

MR. BROWN: I'll ask Jim Wolfensohn to say something about this, because he has already written about it and about its importance. But there has been a proposal from the Italian government backed by the United Kingdom at the G-7 for a health fund. There's been a suggestion that it would concentrate on drugs, commodities, and vaccines related to tuberculosis, malaria, and AIDS. There is, in my view, growing support for that from a number of other countries as well as the work that is being done by the international organizations. I believe that it is possible over time also to involve the pharmaceutical companies.

Some governments like the British government are also considering a research and development tax credit that would encourage research into diseases, in particular diseases that carry off so many people in the poorest countries, and when we know that only 10 percent of pharmaceutical research covers diseases that affect 90 percent of the people, we know that there is an urgency in moving forward with the research program into diseases and the development of vaccines and drugs. Jim?

MR. WOLFENSOHN: We don't yet have any final numbers or, indeed, any assurance of the form of this, but it will include World Health Organization and the United Nations. The World Bank has said it's ready to administer the fund. It would work with the other organizations, but it is as yet premature to say how much or where until the donors decide. Anything that's done in the fund would complement what the Bank is doing on HIV/AIDS. My guess is we'll be north of one billion dollars this year just from the Bank alone, but as to the scope of the fund, it's yet to be determined.

MR. BROWN: Can I just add that the U.K. Secretary of State for International Development Clare Short and I are hoping to attend a meeting in New York on Tuesday to discuss some of the elements of the fund with interested parties. So this is a window of opportunity that I think we will miss at our peril, and I think it is important that we make progress as soon as possible.

QUESTION: A question for Mr. Sinha and the World Bank and the IMF. What is the future of India's economic and financial future as far as the World Bank and IMF are concerned? The rupee is slipping against the dollar every day, and there is a question in the minds of Indian-Americans in this country and also investors, American investors in India.

MR. SINHA: It's a very specific question that you have asked about India. Our currency is floating like every other, like many other currencies in the world, and it's subject to the laws of supply and demand and market forces. So at times you might notice that compared to the dollar, it is depreciating. But compared to the dollar, most currencies in the world have depreciated in recent months. In fact when we look at the rupee we find that the depreciation is less than some other currencies of the world, so it's not really a matter of concern, and day-to-day movements of the currency in the foreign exchange market is something that the central bank in our system is supposed to take care of. Their concern is to avoid undue volatility and uncertainties, and I think they are doing the job very well.

As far as the long-term development prospects of India are concerned, I think it has been recognized that we, along with China, have been a center of stability in Asia, and the growth rate has been satisfactory compared to many other countries. It is not what we would like it to be. There is a lot more that we would like to achieve than has been the case in the past, and while we don't have a program with the IMF, we get their advice and we value their advice.
The World Bank has been an extremely valuable partner in the development process in India, and I have reasons to believe that that partnership with the Bank will continue.

MR. WOLFENSOHN: India is the largest client of the Bank and is the largest location for investment by International Finance Corporation. We have had very constructive talks with the minister. We continue to work in many of the states directly in India and see no reason to doubt that that involvement will grow.

QUESTION: The IMF and World Bank have the responsibility to ensure a crisis-free global economy. Did you detect that Argentina, Turkey, and the United States were going to have problems? Also, how can you say that Latin America is not going to have big problems with the global slowdown if Mexico and Brazil are the first trade partners of U.S. and Argentina?

MR. FISCHER: There is a global slowdown taking place, but the international community is helping the countries most affected, which are Turkey and Argentina. We have made significant progress. We're very close to signing an agreement with Turkey and one with Argentina, possibly in a day or two. The IMFC expressed unanimous and very strong support for the actions the Fund proposes to take in both of these cases. The Mexican economy is slowing down, but it is speaking to the IMF about the possibilities of Contingent Credit Lines in the future, and it has strengthened enormously in the seven years since the crisis. It has been very vibrant. So there is a slowdown taking place, but what the IMFC emphasized is that there is a growth slowdown but there are good prospects that it will be turning around by the end of this year. Most importantly, we stand ready to help countries whether they be in Latin America or Asia or Africa if they are affected by this slowdown.

QUESTION: Last year the Congress of the United States passed a law about Africa and Latin America and the Caribbean. I wonder if you think that it is important as they unite those continents, especially Latin America, where there are a lot of people who need help?

MR. WOLFENSOHN: I was present at the meetings last weekend in Quebec, and there was no doubt in the expressions of the leadership led by President Bush under the chairmanship of Prime Minister Chretien that there was an understanding of the need of Latin America in terms both of market and in terms of sustenance. So if you had any doubts before, the expressions of the U.S. administration last weekend demonstrated that there was a complete unity of purpose. Over the period ahead they're looking forward not only to a trade unification in the continent but also for giving the adequate economic and poverty assistance that's required.

QUESTION: Going back to the health initiative, I was wondering if could I ask Mr. Brown whether there was full support among all G-7 countries for the AIDS-malaria initiative and whether we'll see something coming out of Genoa at the G-8 summit?

MR. BROWN: As you may have seen, yesterday's G-7 communique perhaps for the first time mentioned its support for working with other interested parties in developing a health initiative that would tackle tuberculosis, malaria, and HIV/AIDS. And perhaps also for the first time the IMFC refers in its communique to its joint understanding of the need to take action in relation to the problems, particularly HIV/AIDS, in the health sector in the poorest countries of the world. So it is not simply that the World Bank and others have drawn our attention to the problem. You see all the countries of the G-7, unanimity in the International Monetary and Financial Committee today that we need to look at these issues, and there are proposals, as I've indicated, coming forward; a great deal of work has to be done.

There is a new element following the agreement between the South African government and the pharmaceutical companies, but there is a new impetus from the knowledge that we have of the numbers of lives unnecessarily lost through the absence of proper drugs and vaccines. The Italian government proposed an initiative that may be finalized at the Genoa summit of the G-7. But the agreement now to consider action is far wider than that and includes international organizations, developed countries, developing countries, and I believe we can extend this to the private sector and eventually to the pharmaceutical companies themselves. So this is a major initiative that is being considered and rightly so because we have major unaddressed problems that it is our duty together to both examine and act upon.

QUESTION: One of the issues that has been under discussion is conditionality. Could you please tell us perhaps at the IMFC what concrete decision was taken on conditionality in IMF programs. Are we going to see less conditions after this? If not, there are charges that conditions are moving away from the macroeconomic towards governance conditions. Is this the way conditionality is moving? And then perhaps the Development Committee, HIPC 3, what has happened to that? Has it been discussed? Do you support it?

MR. BROWN: That is six questions.

MR. FISCHER: On the IMF and conditionality, the Managing Director has been emphasizing very strongly the desire to streamline conditionality, and that process has already started with guidelines that went into place last September. It's visible in the number of conditions and the focus of conditions in our programs. If you check on the web (http://www.imf.org/external/np/pdr/cond/2001/eng/overview/index.htm) you'll find what has been done since then. So this is part of an ongoing discussion to focus conditionality on macroeconomics and financial sector matters, and that's happening. There was unanimous support for that in the IMFC today.

The process is not over. We need to look at what happens, what problems may arise as we continue to do this, and then decide on formalizing precisely how we want to move. But that there will be fewer conditions, more streamlined conditions designed to strengthen conditionality and make it more effective, there is no doubt.

There was also a lot of discussion of governance. Those are very complicated issues. But the notion that macroeconomic conditionality would be replaced by governance conditionality is wrong. There is no intent of doing that. The Fund will focus on macroeconomic conditionality.

MR. BROWN: We were asked at the IMFC to consider the debt sustainability of the 22 countries and others coming through the debt-relief process. We were asked to look at the question of post-conflict countries and the position of countries still in conflict and their debt relief, and we were asked to look at the circumstances that arise where circumstances change for countries generally. I believe that the committee today and the joint meeting that has just taken place has shown that we will be alert to the problems that arise in the debt reduction process.

First of all, on sustainability, we say we will agree on the importance of regular monitoring of the debt situation. In exceptional circumstances, when external factors cause fundamental changes in a country's circumstances, we reaffirm that within the HIPC framework the option exists at the completion point to consider additional debt relief.

On conflict countries, there were special measures that we are prepared to look at to help the ten or eleven countries trying to escape from conflict who would need to achieve greater help more quickly. And equally, we're looking at the causes of the debt problem and focusing on the 2015 targets and sustainable development for these countries and the importance of the poverty reduction strategies. So all the issues that have been raised with us, and rightly so, about the position of the 22 countries, future countries coming through, and the poverty reduction strategies I believe we have addressed in this important meeting. All of the international community will remain alert to these problems.

MS. ANSTEY: Thank you very much. That concludes the press conference.


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