Transcript of a Civil Society Organizations Town Hall with IMF MD and World Bank President
October 11, 2012October 11, 2012
Mr. Imata - I have just been told that Madame Lagarde has just left the Imperial Hotel. She is on her way, as well as President Kim. So, as soon as they arrive, of course, we will start. It may take another 5-10 minutes, so, thanks for your patience.
In the meantime, please be informed that there is simultaneous interpretation available. If you do not have one of these [indicating], maybe you need to get one because some people may ask questions in other languages than English. So, if you have one, English is on Channel 2, Japanese on Channel 3, French Channel 4, and Spanish Channel 5. If you are already thinking of asking a question and if you would like to do that in one of those four languages, please feel free to do so. So, that is one housekeeping issue.
Another piece of information that we would like to share is that this session is live webcast or broadcast, and also it is video recorded so you can watch it in the stream, in the web stream later. The link, I think it will be available in the Civil Society Policy Forum Website.
Also, although we are going to start a little late, we will need to finish on time. That is 7:30, so be mindful of that. We cannot really run over because there is a reception for us right after this Town Hall Meeting. That would mean if you are thinking of asking a question, please make it very, very short and concise so that we can hear from as many participants as possible.
So, those are some of the housekeeping issues I would like to relate to you at this point. Like I said, we will start as soon as President Kim and Madame Lagarde arrive here.
Mr. Imata - Okay. Hopefully, it is going to be in between 5 and 10 minutes that they will both be arriving here.
Okay. We are going to get started. Madame Lagarde is on her way and she will be joining us as soon as she can.
Welcome to the CSO Town Hall Meeting. My name is Katsuji Imata, Acting Secretary General for CIVICUS World Alliance for Citizen Participation based in Johannesburg, South Africa. I will be chairing this session today.
If I may, let me just say a few words in Japanese. (THROUGH INTERPRETER) Welcome to the Civil Society Town Hall and Reception. I am with CIVICUS and the Acting Secretary General. It is an international alliance of CSO and based in South Africa. My name is Katsuji Imata. I have the honor of serving as your moderator today. Thank you.
(SPEAKING NOW IN ENGLISH) Now, this Town Hall Meeting is a very nice tradition of the Annual World Bank-IMF Meetings that have been going on since 2004. For Jim, if I may say your name, this is your first CSO Town Hall Meeting. We are very, very excited to have you here. The format of this meeting is as follows, and this is really following the tradition of the Town Hall Meeting from a few years ago.
We have two CSO discussants. On your right you see Sheila Patel, the Chair of Shack/Slum Dwellers International, who is going to open with a few short interventions, followed by Jim, who is going to respond and give some opening remarks. Then after that, we will turn to Saman Kelegama, Executive Director of the Institute of Policy Studies of Sri Lanka. In the same format he is going to say a few words, 4-5 minutes, as opening remarks, followed by Madame Lagarde, or maybe I should call her Christine if she allows me to do that, to give her opening remarks for 6-7 minutes. After that, we are going to open up the floor and encourage you to ask questions.
Now, as I said earlier, since we have a good number of people here, and we are very delighted to see familiar faces and others, we would like to give as much opportunity for those here to really ask questions. Please ask a question, not two questions. Just one question. Please do not make a statement. If you start to do that, other people will follow, which we do not like to see. The rule here is really one question. Then please be precise and as short as possible.
Then we will take four or five groups of questions and then ask Jim and Christine to respond to that. We will see how many rounds we can do, maybe two or three, depending on how fast we turn this around. As I said, we need to really end promptly at 7:30 so that we can go to the next reception.
Okay. With that, I think I will now turn to Sheila to start.
Ms. Patra - Thank you very much. This is an amazing privilege for me. It is not something that I could have imagined that I would sit in front of so many of you and have the opportunity to speak to the President of the Bank on his 104th day.
Like many of you, I was there at this afternoon’s event and I must say that you energized a lot of us with your optimism, your sense of can-do, and your belief that change for the better is imminent.
In many ways, I think I represent those networks of people who feel disenfranchised in today’s world, who have begun to see that there is value in creating organizations and networks that not only seek to make their cities or their governments accountable to them, but seek both voice and agency from institutions like yours. As an organization that is committed through your commitment to end poverty, I believe that there is a vacuum in today’s international discussion about the voices of these constituencies.
You mentioned taking up the possibility of looking at voices of the poor. That process was many years ago. There are now powerful leaders in different constituencies representing different marginalized and disenfranchised people who want to come and make their own representation. I would encourage you to tell us that that possibility is imminent and that within these structures that exist within the bureaucracies that exist, there can be space for those voices, because they will come with solutions. They are powerful forces with energy that want to participate in shaping this new world and I think you need to explore ways by which the bureaucracy that you head has time, space, and the capacity to listen to them.
My second major concern is that we are all going to be involved in a debate of what happens after 2015. When we started discussing the MDGs, the world had not yet become mainly urban. The urban world and the kind of poverty that you will see in the urban environment has different characteristics, different difficulties, different levels that constitute poverty. We need new voices, new visions, and new knowledge to address this process.
Also, cities and urban areas are places where the market does play a critical role, and we have very few governance mechanisms that deal with this. It would be very useful for us to hear from you that, as part of the global architecture that is seeking governance, how are we going to arbitrate the crisis that is coming up in urban areas where you see extreme poverty and amazing wealth.
I will end here. I am sure that my colleagues will have lots of questions for you.
Mr. Kim - Thank you very much, Sheila.
It is a great honor for me to be here. As you all know, I hope you all know, I come from your world. I have been part of a civil society organization. I helped found a civil society organization in 1998. Through my work for years and years with Partners—by the way, I just stepped off the Board of Partners in Health because I was forced to in taking on my new job at the World Bank.
Since I was a very young adult, I have been concerned with the health of poor people, but not just health. Partners in Health has worked on everything from housing to education, to micro-enterprise loans, and, of course, on health care. Fundamentally, our focus had been on social justice and what the prescient Latin America used to call a preferential option for the poor.
Now, for me, the notion of a preferential option for the poor was especially important, because that simple idea had a lot of other implications. What it meant was that if you truly were, especially for people like me who have so many advantages and grew up in a developed country, for people like me, the notion of a preferential option for the poor helped to bring great clarity in that the implication was that it is not a preferential option for you, for your own idea, for your own cause, for your own organization but, in fact, was a call to focus specifically on what various policy interventions meant for poor people.
Now, quite unexpectedly and perhaps some would say inexplicably, I find myself in this position of being President of the World Bank. The process was quite sudden and a surprise to me. Now that I am here, I have brought with me my years of experience working in a civil society organization, my years of experience trying to think through what the implications of the notion of a preferential option for the poor would mean in the various positions that I took up.
Quite early on in my tenure at the World Bank, I began asking our staff, well, what is our fundamental mission, and if our fundamental mission is to end poverty, how quickly can we do it and what are we going to need to do to change the way we work so that we can actually end poverty far more quickly than it is predicted to end. This is the question that we have continued to ask.
I really want you to understand this. I want you to understand this very clearly that, inside the World Bank, I have discovered a deep, deep passion for fighting poverty. Everywhere I go inside the Bank, what they tell me is that we came to the Bank to fight poverty. I see it throughout the organization.
Now, you know, the World Bank is a multilateral bureaucracy and multilateral bureaucracies are notoriously difficult to understand. Let me tell you this. Multilateralism is an enormous challenge. I believe in it deeply. I worked in the UN system before and I believe in multilateralism very deeply.
What it means is that you have to deal with all your stakeholders. Your stakeholders are varied. They are donor countries, recipient countries, countries in the middle. We have to find a way to move forward with all of our constituencies supporting the path. It is a tricky job. What has given me the greatest optimism as the leader of the World Bank is this deep passion for fighting poverty. It exists at the Bank in a way that was surprising even to me, and I expected it to be there. So, we start in a good place.
Now, as we go on to tackle difficult complicated issues, I would ask of you several things. First of all, I am here today and you should know that I have met with civil society organizations very early on in my tenure. When I went to London, one of the things I did was meet with CSOs and I will continue to do that.
It is hard for me to avoid it because so many of my friends are leaders in civil society and, believe me, they continue to send me many e-mails telling me exactly what I should do tomorrow and the next day. I appreciate that; I appreciate the input. So, I want you to know that this conversation is an important beginning, but I am committed to continuing it. Let me tell you why.
I am not doing this because I think it is the politically correct thing to do. I am not doing this to give you all a sense that I am going to do the dance. I do this because I came to this job to end poverty. I know that there is no way that we are going to be able to do it without the deep engagement of all of you in the room. There is no way that a single organization—
I mean, if you look back at the history of the World Bank, decades ago the World Bank was such a huge player that it could do things on its own, but we understand we cannot do things on our own anymore. For me, the engagement of civil society, our willingness and ability to hear you, take insights and innovations that you have been directly involved with in the field, making sure that we capture those innovations, capture those insights and spread them to other parts of the world, this is critical for the mission of ending poverty.
In terms of the specific issues, I want you to understand very clearly that this is not a cosmetic exercise. The voice of civil society, the voice of so many of you who have done so much in the countries, in the regions where you work, this is critical. The innovations are critical. We need to capture them and spread them if we want to end poverty more quickly than otherwise.
In terms of urbanization, as you may know, the World Bank has quite a significant group focusing on urban populations. Around the issue specifically of governance and arbitration, I think that is less our role than ensuring that development solutions really look at the phenomenon of urbanization. It is not a field in which I am a specialist. I was very encouraged in my walk-arounds of the World Bank to see that there is tremendous expertise and passion for improving the urban landscape.
Let me also say again, and I have said this before, you know, I have been trained in science and I am very alarmed with the data that we are seeing around issues of climate change. I have always been an observer and a consumer of the literature and data on climate change. Let me be very, very clear.
This is an issue that we have really got to take seriously on many levels. The debate is over, and I think it has enormous implications, especially for poor people. What we know is that the worst effects of climate change are going to be felt most severely by the poorest and that is happening right now. The work that we are doing around urban landscapes, around climate change, these are things that continue to move forward and I do see this as just the beginning of a very deep conversation.
I am going to challenge you. I am going to challenge you to not think only about a particular issue that you are concerned about. I am going to challenge you not to think only about the particular country that you work in. If this economic crisis has taught us anything, it is that all the different people and economies in the world are far more integrated and linked than we ever imagined.
So, my job is to be the head of a large multilateral organization that has to negotiate between many different interests of our multiple stakeholders. What I will ask you is to help me think through what we all need to do together to truly—and this is the language I have been using inside the Bank—to truly bend the arc of history; what would it take to bend the arc of history in a way that we end poverty far sooner than predicted; what would it take to bend the arc of history so that the notion of inclusive green growth becomes a reality; what do we need to do differently.
I would argue that we need to work together in that spirit and not spend all of our time arguing about things that could be better, that may seem very important, but in my view pales in comparison to the task of truly engaging an inclusive green growth for the entire world.
Mr. Imata - Thank you very much Jim, and welcome.
Mr. Kelegama - ...[Foreign language coming through my earphones]...[SPEAKING IN ENGLISH NOW] and this is evident at the usual country level and in a fora like this.
However, the IMF’s engagement with civil society is an area which needs further clarity. We all know when the IMF engages with the government, it is a formal engagement. It is done under the Rules and Regulations of the IMF; for example, Article IV consultations. When it comes to civil society organizations, engagement is informal and most often ad hoc.
Now, if we take a very narrow perspective of looking at a member government as a shareholder and civil society as a stakeholder, perhaps then civil society organizations cannot complain that much in the present mode of engagement.
But we all know that the IMF, when dealing with governments, does deal with governments that are incompetent, that are corrupt or undemocratic, or a combination of these. It is the civil society organizations that really bring the government to its toes on accountability issues. Just having an informal dialogue alone would not do.
Can the IMF create some institutional space to have a formal form of dialogue with civil society organizations? In other words, can this also be part of the Annual Performance Review?
The second question I would like to pose is the following. Civil society organizations operate in a very hostile environment. The political environment is hostile; the legislative framework is not very friendly; access to information and data is restricted; and it is under very tight budget constraints that civil society organizations operate. Some governments in developing countries think that governance is the business of the government. When civil society organizations express concerns about governance, it is often dismissed.
If you look at the global economic environment where civil societies operate, we see that the space is shrinking, access to influence multilateral fora, etc., are gradually getting restricted. Domestically and internationally, we see that civil societies operate in an enabling environment that is very difficult as well as challenging.
Now, the IMF, when it engages with governments, often emphasizes creating an enabling macroeconomic environment for growth and financial stability. Similarly, can the IMF emphasize to the governments it is dealing with to create an enabling environment for civil society organizations? In other words, can the IMF factor in the enabling environment for civil society in its country strategy of conditionality. After all, it is the civil society organizations that keep the government accountable and this accountability goes a long way in contributing to growth and financial stability, which are the ultimate objectives of the IMF.
The third point I would like to make is the role of civil society in the context of ensuring governance, transparency and accountability, and civil society playing a role as an advocacy body in the sensitizing of issues. Above all, in sustaining civil society organizations, funding is very important.
Now, the private sector in most developing countries are not interested in providing finance for civil society organizations. We all know that the IMF has its technical assistance strategy package for institutions of member countries for capacity development, and this technical assistance we see in training persons in public expenditure management, tax officials, persons involved in macroeconomic data analysis, and so on. This is well and good, but this assistance is for the government.
Now, given the fact that the IMF recognized the role of civil society and wants to have a serious engagement with the civil society organizations, can the IMF consider expanding and extending this technical assistance to civil society organizations, also?
So, basically I have highlighted three areas: The engagement with civil society, an enabling environment for civil society, and empowering civil society.
The final point that I would like to make is—
Mr. Imata - ...[Microphone not on]...
Mr. Kelegama - Right. Thank you very much.
Ms. Lagarde - Thank you very much. As I was telling Mr. Kelegama, maybe we will get a second chance, him and I, to come back to the point that he wanted to make.
Let me, first of all, offer my apologies because I arrived late. I might even leave early, which is bad news. Equally, you have to know that—President Kim will attest to that—I missed entirely the G7 meeting, which he luckily could attend. I am currently missing as well a special meeting that was called by members of the Eurozone. After that, I will really have to make another EU zone-related meeting that is very important. So, missing a G7 and missing and a Eurogroup meeting, on the one hand, and arriving late at the CSO meeting, maybe I will take the arriving late at the CSO meeting.
Second, I would like to thank you all for not only being here for engaging, but also for all the good work that we have been able to do during the course of the year. There has been a lot of engagement. I know that our External Relations Department is really reaching out, is canvassing views, is organizing sessions whether by conference call, by internet, or face to face whenever they are engaged in an Article IV mission that you referred to, and I know that this is paying off because we are hearing you.
If I may, I am going to address your concerns and your points through my own lenses, because we tend to see the world from our respective lenses. I hope I can meet yours while adjusting mine.
You know, I have been doing my job for a little over a year now and I have come to an institution that is very strongly rules-based. As a lawyer myself by training, background and profession, I wondered why that was the case. I came to realize that it is certainly rigid, certainly regarded as a constraint quite often, but it is a necessary one in order to make sure that there is evenhanded, nondiscriminatory, unbiased regard, treatment, and access for the entire membership so that low-income countries, middle-income countries, emerging market economies, advanced economies are on par when it comes to having the benefit of IMF services.
So, you mentioned earlier on the rigidity of our bilateral surveillance. I myself was a bit concerned about that rigidity and by the rigidity in general, but I came to understand and to appreciate actually the value of that rigidity.
The first area of activity for the IMF where clearly you intersect and you have enormously influenced is the activity that I regard as our lending activity, which was moribund only four years ago and which is booming at the moment. Well, in two areas you have been critical in helping the institution and I think in helping the community at large.
First, on the Review of Conditionality, we have engaged, we have reached out, you have responded, and you have been critical in actually reassessing conditionalities going forward. Point No. 1.
Point No. 2, and I would like us all collectively to claim victory on that one, is on the PRGT, Poverty Reduction and Growth Trust, which, as you will remember, I had committed to actually replenish and make sustainable on an ongoing basis for the financing of low-income countries. We have done it. We are within 0.04 percent of being at the required majority, actually the 90 percent majority that is required for the first part. We have exceeded the 75 percent majority.
There has been a Board resolution, as you know, because some of you have actually acknowledged and applauded the completion of that project. We have reached the 75 percent majority; the Board has voted; and the windfall profit on the sale of gold has been decided to be allocated to the PRGT. So, I am confident now that the PRGT is on a much more sustainable footing and that we will be able to deal with the demands of low-income countries when it comes to the type of support that we can provide after 2014, because the financing was at risk post-2014.
So, in those two areas you have been a great support. You have gone into battle for the financing of the PRGT, for this windfall profit on the sale of gold to be allocated for the low-income countries’ benefit.
The second area of activity that we have for the membership is that of technical assistance and training in the areas that are our core expertise. On that front, we are already doing quite a bit with the civil society. You know them as EXR; the External Relations arm of the Fund is actually providing some of you, maybe not all of you but some of you with training, with capacity-building. Certainly, we will be exploring further what we can do on a more systematic basis as you have just mentioned.
The third area of activity for the Fund is that of surveillance. In the area of surveillance, we try to also consult with you, engage with you. I do not think there is a single Article IV review that we conduct on the ground without checking with civil society organizations, with trade unions, with those who actually can convey the views of civil society as we understand it.
I would like you to know that on the surveillance front we have decided to beef up our surveillance going forward. We have the traditional bilateral surveillance that is one on one, looking at the domestic policies and the domestic impact, going under the skin of the economy and giving an assessment to the government.
We have decided to go further by actually inviting multilateral surveillance into bilateral surveillance so that the external or the spillover effects of domestic policies can actually be assessed on a reciprocated basis with its impact inside but also its impact outside, because we think that it is important that all players be assessed on the basis of what they do but also what they inflict on, impose on, or offer to other countries. That is a major change that has taken place in the area of surveillance. We will engage you in those areas of multilateral surveillance where it can actually impact on the bilateral surveillance approach.
Finally, two things. I would like to thank Japan, the Japanese authorities, and the Japanese CSO, who have gone out a long way to actually bring this meeting together, bring all the activities that you have had over the past few days so that there can be a meaningful exchange among yourselves, sharing of views, comparing notes, and obviously this meeting with Dr. Kim and myself.
Last point. As you know, the European members, actually 11 of them within the Eurozone, have decided to approve the financial transactions tax, which is something that many of you are keen on as well and see the benefit of. We at the Fund, and you see that I am now a “we” at the Fund, no longer me as a person with my own views, we endorse the principle that the financial sector must contribute more in consideration for the services that are rendered to it by virtue of this implied guarantee that they have had the benefit of.
We at the Fund regard the financial activity transaction as more efficient and not as likely to give arbitrage opt-out and loopholes in the vicinity of those countries that apply the financial transactions tax. Having said that, this is clearly a good move. Whether it is complemented by others joining the fray remains to be seen, but it is certainly a good step in the direction of making sure that the financial sector contributes more to the services that it benefits from.
So, Mr. Chairman, I know I have not necessarily dealt exactly specifically with your points, but I have tried to embrace them with my pair of glasses.
Mr. Imata - Okay. I said one question only from each of you, so I get to ask one question.
So, my question to you both is, what change can we as civil society expect to see as concrete results of your leadership in the Bank or the Fund’s policy guidelines, organizational culture, what have you, for a more meaningful engagement with civil society? We are talking about results-based management here.
Ms. Lagarde - You know, I am actually challenged by your question, because as much as I believe that it should be results orientated, equally I think that there are many, many areas where civil society should engage and where we should seek out the engagement of civil society as feedback.
I would not have thought that, to raise money, the weight and the pressure of civil society would have been so important. Clearly, when you had leading figures of civil society saying loud and clear, or even singing loudly and clearly, that the PRGT is important and that funding of the PRGT mattered, it was critically important and it made a difference.
So, I would say for any initiative where the voices of civil societies will carry the day, will push the envelope a bit further, will make a difference, I would want to be a Managing Director who has sought out the engagement of civil society. I think we should also look at that relationship as a two-way street. I need your support and you need also our support and our engagement. So, I hope we can make it reciprocal.
Mr. Kim - Well, I am not sure what you mean by “concrete.” You know, my commitment to so many of the issues that we have worked on together over time is pretty concrete. My full commitment to engaging with you and the campaign, what will it take? Many of you are wearing the T-shirt.
The campaign is pretty concrete and we are actually getting tremendous amounts of interesting inputs and great ideas from you, and we are going to take it to the next level. If we are going to end poverty, what will it take? This is a question that we are asking in a very serious way. This is not a public relations campaign. So, those are a couple of the things.
I would be very happy to hear from you what are the other things concretely that we can do. Let me also preface it by pointing out that the World Bank is also very much a rules- based organization. Let me put a different perspective on it.
What Christine said is absolutely true. We have to be fair about how the organization works. The other aspect of the rules is that it is so difficult to manage a multilateral institution that, if you did not have the rules, you would be embroiled, in the middle of enormous political fights all the time. So, please understand that the rules help us to move forward.
Now, one of the things that you are going to see at the World Bank is that we are asking the question about ending poverty and we are reflecting it back on how we are organized. Let me tell you that people inside the Bank agree with the complaints that we have been too focused on volume, too focused on approval, and we have not been focused on results. An overwhelming majority of the people at the Bank agree.
But for us to go through the kind of change that we want to go through, it is going to be a long process where we have to be deeply engaged with the Governors and the Board. We are committed to it, and we are committed to it especially because the way we are structured right now is not conducive to moving quickly to end poverty. Do not expect that everything will change overnight because I or someone else has a good idea. The rules are in place in so many ways to protect multilateralism.
Mr. Imata - Thank you very much for your response.
Since Christine will need to go sooner than Jim, I would like to take a few questions to the IMF. For those of you who are not really sitting in the first row, I think there is a roving mike. You will need to stand up so I can see, but the first row you can just raise your hand.
Okay, questions for the IMF, please.
Question - Because I was allowed, I am going to speak in my mother tongue in Spanish.
(THROUGH INTERPRETER) Some countries such as mine are having to carry out a comprehensive tax reform and this is a very staunch one. Madame Lagarde, the low-income citizens, do you not think that both of the organizations, the IMF and the World Bank, since they have undertaken to abolish poverty, do you not think that they would have to do more in that respect?
Question - I will speak in French.
(THROUGH INTERPRETER) I am from a French-speaking country and, therefore, I would like to speak in French. I am from Cote d’Ivoire. I have a question addressed to Madame Lagarde.
First of all, I am very pleased that you are heading this organization. I am from Cote d’Ivoire but, in fact, my country concern is in East Africa. I am one of the pygmies and we are more than a million who live in the hill part. This is the first time that people for 40 years now have had shoes and have been able to be bathing and this has restored human dignity because these people live in extreme poverty. I would like to ask if the IMF can help us to enable the pygmy population of Burundi, and I would like to know how you would be able to lend us that kind of assistance.
Question - My question goes to both heads of the institutions.
Going beyond mainstreaming gender equality, do you have in mind any temporal concrete financial mechanism in order to create new financial opportunities for growth of rural women’s business as part of an inclusive growth paradigm, and what they are?
Thank you. I respect your demand to be short and concise.
Question - (THROUGH INTERPRETER) hello. I come from the Republic of Guinea, Conakry. I would like to address the question of what you can do, because 60 percent of the population in my country is young, youth, and I am wondering what the major leaders, such as yourself, can propose so that there can be genuine leadership roles played by young people. Let me give you an example—
Mr. Imata - Sorry. I have to cut you off. Let us give a chance for Christine to respond.
Ms. Lagarde - (THROUGH INTERPRETER) I am trying to intuit what was the end of your question, I can assure you.
(SPEAKING NOW IN ENGLISH) You were asking the tax reform that is under way, right? Well, it is one area where—first of all, I do not know if in the Dominican Republic we are engaged in providing technical assistance concerning tax reform. I wish we were, because it is really a field where we have expertise, where we can really make recommendations and couple the tax reform undertaken by a particular government with two concerns: one, it being redistributive; second, it being efficient when it comes to collecting revenue for the state.
You have got these sort of two big theories about taxation. The orthodox experts of taxation are about, irrespective of how it is conducted, taxation is all about collecting revenue. Whether it is direct, indirect, redistributive or not, we do not care; progressive, regressive, irrelevant, it is revenue collections.
We try to combine both; in other words, make sure that it does provide revenue to the state that reforms its taxation, but that it can also be adjusted in order to be redistributive and in order to be progressive.
So, I do not know how we can deal with the issue. I will ask, actually, the Head of the Department that looks at the Dominican Republic to see whether we can offer our services in terms of technical support.
(THROUGH INTERPRETER) Let me turn to my friend from the Cote d’Ivoire. I am not only Mama Lagarde but I am Grandmama Lagarde, because I am a grandmother these days. As far as Burundi is concerned now, the issue facing the IMF and the rules that govern it are as follows. We intervene in a country at the request of that country. So, what might be appropriate in any way whereby we could participate in assistance of any sort whatsoever would have to follow on the willingness and desire of the country to assist this population.
[NOTE: Unfortunately, the Questioner is not using a microphone and cannot be heard by the Interpreter.]
So, are you seeking technical assistance? Surveillance assistance? So, we have to be given the alert and then intervene; is it a question of a program, for example. You, who is a great expert in your country, will be able to come back to these issues concerning the fact that pygmies do not have access to land ownership. If there is either technical assistance or a surveillance operation, if we can lend assistance to make progress, that would be something that we would be very intent on doing, and Mr. [Liu] will also be able to address this for you.
(SPEAKING NOW IN ENGLISH) Sorry. Financial incentive mechanism to provide or offer a more inclusive growth paradigm? That was your question, was it not?
Question - My question was, because the orientation for inclusive paradigm, how you are going to implement to include rural women, not just gender mainstreaming but make them development actors. I was interested in special financial mechanisms and I have in mind four examples, but how to support them to become development actors, be producing not only low-level, low-scale products, but be competitive on the market. I am from Kyrgyzstan. I forget to tell you.
Ms. Lagarde - I think I got your point. My fear is that that question is going to be much better addressed by Dr. Kim, because you are really in the field of empowerment of women, including rural women, in the field of development of the economy. The only aspect from which we address that is when we look at the financial sector assessment of a country where, for instance, we recommend micro credit infrastructure and transparency of allocation of financing. That is the angle from which we would look at this issue. We do look at it and we include that in our financial sector assessment that we do on a regular basis for countries.
Now, how do we engage the talent of young people. (THROUGH INTERPRETER) The question you raised is truly a critical issue. Involving young people, first of all, means that they have to become part of society. To do this, they have to be able to find jobs; they have to be able to make their voice heard; and they must have hope for the future. These are all aspects which are prerequisites, indeed. The overall development of society will have a critical impact on enabling their integration and involvement. I have asked that the institution set up a broad Working Group focusing on growth and employment.
Now, issues of growth or microeconomics are not really ours, but we are, nonetheless, going to look at this. Macroeconomic policies are critical for determining growth and, hence, generating jobs, and it is from this standpoint that I think we can involve and engage young people, thus avoiding 25 or 30 percent of the youth population which is not included in society, does not have jobs, and this is a tremendous waste.
Mr. Imata - Again, we will take a few more questions.
Do you need to go now? You need to go now.
So, Christine needs to go. Unfortunately, if you have any more questions for the IMF, please write it down and then give it to me or the IMF staff later. We will make sure that we will have some someone respond.
Ms. Lagarde - I have another ten minutes.
Mr. Imata - That is good. Okay. Let us do another round.
Question - I am a student at the Graduate School of International Development, Nagoya University, in Japan. Thank you very much for having this opportunity.
On behalf of the youth fellow sitting here and the youth in the world, I would like to ask a question to Ms. Lagarde.
In addition to the question of the gentleman over there, many issues have been discussed in the past few days, high unemployment rate and also the burden you have to face due to collapsing social security and the pension system. I would like to ask what kind of specific measures that the IMF can take to narrow this intergenerational gap.
I would like to make a request, not a question, to the President of the World Bank to increase the number of projects investing on youth and human capital. I believe the youth is the force for reviving the economies and changing the world.
Question - I am from Belgium. I have a question to Dr. Kim. Some of the rules, the procedures, and policies in relation to the safeguards are going to be discussed in the next one and a half years and it is a very important achievement of the CSOs in the past 20 years. The question is, does Dr. Kim commit that these safeguards would not be diluted and, instead, would be harmonized when they are being revised?
Question - My question is for President Kim. I am from Human Rights Watch. We were very pleased recently to hear you commit to reintegrating the World Bank in the United Nations and the international system. A key element of this will be ensuring that the World Bank protects and upholds human rights. What key reforms do you foresee in order to achieve this at the World Bank?
Mr. Imata - Let us take just one more question for Christine, and she will need to respond and go. So, a question for Christine. Please go ahead.
Question - We are concerned that if the World Bank’s mission is to end poverty, many of the monetary and fiscal policies that are advised by the IMF increase inflation and may hurt the poor, like, for example, removing subsidies, depreciation of the local currency, etc. So, please, we would like some elaboration on that, whether there is some contradiction in the objectives and the tools.
Ms. Lagarde - Thank you very much.
The youth fellow representative, you mentioned jobs, social security, and pension. As I said, it is not necessarily the core expertise of the Fund, but it touches on matters that are the core expertise of the Fund. Jobs is about growth; growth is about jobs. They are closely interrelated. All macroeconomic policies in the world will not be particularly efficient unless there is growth. So, on that front, clearly we have common cause.
We need, in order to help the membership, to bring about the appropriate stability on the economic front. We need to push growth. If we push growth, it will have to include jobs as well, because growth has to be, No. 1, inclusive, and No. 2, job-rich.
No. 2, you mentioned social security and pension. Social security and pension are extremely important in the exercise of rebalancing that needs to happen. If I take a country that has a massive surplus, and we can think of a few, if those countries with a massive surplus put in place social security protection, pension schemes that give consumers, workers, the assurance that, going forward, they will be okay, then the ability and willingness to consume will be activated. If that is the case, the domestic economy will itself grow instead of being essentially driven by the engine of exports. That, with a view to rebalancing the world economy, is absolutely spot on.
Third, you mentioned the intergenerational gap risk. Well, again, that is vital from the point of view of debt. When countries, particularly the advanced economies, are loaded with debt, what do they do? They charge the next generation or the generation after that with the duty of having to honor the commitments that they have taken by subscribing to debt by issuing bonds that have to be reimbursed down the road, and that is not a sustainable process. So, from the economic angle, whether it is on the issue of debt, on the issue of consumption, or on the issue of growth, we touch on the three topics that you have mentioned.
Now, on the policies that we recommend and where you were saying that maybe they are not very good and they actually do not reduce poverty but they accentuate poverty, I would challenge you, because I think that what we are trying to do is to direct or redirect, rather, those policies that you have referred to. You mentioned subsidies. We are currently working in various countries where we say to governments, phase out your subsidy system.
Now, when you listen to that, you say, well, she is mad. If they phase out the subsidy system, those people that are getting the food stamps, the oil cards and all the rest of it, they are to be impoverished. Well, when you actually analyze how that works, you very rapidly see that the bulk of the subsidy benefits actually goes to those that need it the least.
I do not want to embarrass any country, but all the countries where we are working at the moment where we recommend that subsidy programs be phased out fall exactly in that category where the 20 percent wealthiest get the benefit of 60-70 percent of the subsidies or the grants that are made available by public spending; that is, by the money of the people. This is not right.
The way in which it is phased out is what matters. If it is removed brutally, then that is a big problem. If it is phased out with a re-targeting of those people that need the support by different approaches, whether it is Egypt at the moment, Iran a few years back, Indonesia, Nigeria, those countries have adopted different methods and processes to actually remove gradually and make sure that enough money goes to those that need the equivalent of the subsidies. It is not necessarily called subsidies anymore. It can be cash payments that are made to them. At least it goes in the right pockets, not in the wrong pockets. So, that is what we recommended and I think that is a good thing.
You mentioned the currency devaluation. Unfortunately, when a country is in serious difficulty, it is one of the quickest ways to readjust and then bounce back with the creation of growth, with jobs again. It does go through a period time when, you are right, the currency is devalued; inflation goes through the roof. It is hard on everybody, but it is particularly hard on the less assisted, or less privileged, or the poorest at the end of the day, which is why when we do programs I hope we continue that approach. We also try to be attentive and to be careful with those most in need so that there are financial social safety nets that are put in place to protect them from the hardship of the measures that need to be taken in order to restore the situation.
Mr. Imata - Thank you very much, Madame Christine Lagarde. You have to go.
Would you like to respond to some of the questions?
Mr. Kim - Sure. On the first question on gender equality, you know, over the first hundred days, I have come to learn that, for Bank staff, gender equality is now much more than just a phrase and mainstreaming is more than a phrase. I mean, we really are paying attention to the extent to which every loan or grant that comes to the Bank is tackling the issue of gender.
Now, are there concrete things that we are doing? Well, let me give you two examples. Just today we had a session on women in the private sector, everything from ensuring that women have access to financial services, to working on encouraging investment into women-owned businesses and encouraging entrepreneurship among women in the private sector, to a project that I saw in Cote d’Ivoire, and this very directly gets at your question.
It turns out that many women in Cote d’Ivoire are involved in cashew farming. The amount of time that it took for them to process all their cashews and then try to sell them was leaving many of them in poverty. So, in Cote d’Ivoire specifically, we invested in a program that makes it much simpler for woman growers to shell and prepare their cashews. Moreover, a woman entrepreneur had developed an oven baking system that was far more efficient than the way that the women were doing it and for the first time they formed a collaborative.
Now, the collaborative only brought together a small proportion of the women farmers, but it is the first step in a much larger program in which not only are we going to help them shell their cashews and prepare them more effectively, but the truly exciting development is that we are going to give them access not only to local and national markets but to global markets.
So, this is how it is supposed to work. I have to say, you know, 25 years ago that the World Bank was not at the forefront of climate change, mitigation of environmental sustainability. The World Bank was not at the forefront of ensuring women’s participation in the global economy. I have to tell you that what I found is that the commitment to those issues is very real and very strong.
I will simply continue to push the development of concrete programs. My role is simply to continue to ask, how are we doing; what are the results; show me on the scorecard how we are doing in terms of increasing women’s access and participation in the economy.
You know, it is a very practical issue for me. If we want to end poverty, we have got to stop relearning the lesson every time that women’s participation is critical. Every single time you see programs start out ignoring the fact that women have to be at the center and then learning it over time. Mohammad Yunis learned that with the Grameen Bank. Then the conditional cash transfer programs had to learn it again. I mean, this is a story I tell often because we should just have learned the lesson by now that you have got to keep women at the center.
In the area of safeguards, I agree with you. It is a great accomplishment of civil society. We have absolutely no intention of diluting the safeguards, but here is the issue. We are going through a process now where we are asking ourselves really tough questions about how quickly we are able to move on any given project.
Now, the good news is that when there are emergencies, we move very quickly. We get our best people. We continue to honor the safeguards, but we get through the process more quickly. We need to find a way to maintain our absolute commitment to the safeguards, but to be able to get through the process more efficiently and effective. We are taking too long to approve projects.
Now, the reason we are doing it is because we want to move the attention of the Board from simply focusing on approval. There has been a critique that is almost as old as the World Bank itself. Again, the good news is that that critique is shared by the World Bank. The critique is, why do we spend so much time on approval and why is there such a focus on volume as a way of assessing the performance of individual Bank employees? Why can we not shift the focus to results and that the people who are rewarded most are the ones who actually work with our member countries to produce results for the poor.
Now, the IFC has already begun moving in that direction to change the way that their incentives are structured. The good news is that there really has been a change at the IFC. Now the reward is for development impact, not necessarily for volume of investment or loan. We have got to keep moving in that direction. In the process, we have got to be able to get through our safeguard screening process, but do it quickly and effectively so that we bring the real impact to the people.
In terms of human rights, I was Head of the Francois-Xavier Bagnoud Center for Health and Human Rights and so I have great respect and deep respect for the work that Human Rights Watch has done. I have to say that inside the World Bank the term “human rights” is not one that is used a lot, but I do not think that this has anything to do with a lack of reverence for the importance of human rights.
You know, my own approach at the Center for Health and Human Rights was to spend all my time trying to actively ensure that people actually had those things which they had a right to. I am not a lawyer by training. I am a physician; I am a development practitioner. I think the great thing about the World Bank is that, for us, it is human rights in the doing. In other words, do people have access to financing? Do people have access to education? Do people have access to health care and social protection? You know, we are an implementing agency. This is why the relationship with the UN is so important.
I have a very close personal relationship with Ban Ki-moon. If I can use the American vernacular for a second, he is my homeboy. We were born in the same country and speak the same language. I think that that close personal relationship is important, because what I have made clear to him is that he is the leader of the multilateral system and that we are very much a part of it.
Moreover, what I have said to him is that, given the urgency of all that we need to do, we just simply have to insist with our staff that battles between the agencies within the multilateral system have to stop. I have seen it too much. I have experienced it. I have been in the middle of these battles. We have to send a very strong message that every time we meet—and we meet twice a year in the Chief Executive Board—we are going to focus on problem-solving and we are going to send a very strong message that the purpose of the multilateral system is to work together to deliver results on the ground for the people who need them the most.
Mr. Imata - That is very, very heartening to hear.
This has got to be the last round, unfortunately.
Question - I am from the Ghana Universal Access to Health Campaign. Mr. President, before I ask my question, I have the honor to present to you this letter that is signed by 110 civil society organizations.
Mr. Kim - I have about ten copies of it.
Question - Thank you very much. Great
Basically, our letter calls on the Bank to take concrete action to advance the goal of universal access to health care in developing countries. We recognize that, for far too long, the Bank promoted health care users fees and privatization of public health systems in our country. We believe that the tide is turning right now. With your commitment that we should work together to turn the arc of history, we believe that this is one concrete action toward making health care accessible to all. We would like to know what specific plans you have to ensure that everyone has access to universal health care.
Mr. Imata - Please keep your question very short, because we are going to run out of time.
Question - I am from Pakistan. Sir, I would like to draw your attention on something very grim that happened. A girl was shot at because the basic question that she was asking was to continue to keep her school open. So, in Pakistan, the World Bank is helping a lot on the education side, but the education situation continues to be pretty grim. There are around 25 million 6-16 kids out of school and a 40 percent dropout the of public schooling system.
The World Bank is doing a great job, has a lot of credibility in my country, and is reaching out, but we would like to see that no child is denied this basic right. I am very pleased—I was keeping tabs—that you were there when the Education First Initiative in the UN was announced.
Pakistan is a large country and it will impact and affect the rest of the world. This basic human right has to reach all children. Sometimes, like this girl was shot, the writ rate of the state was not adhered to. So, I think the World Bank can broker a deal with a social contract between civil society and the government. The civil society is now holding the government accountable for that.
So, we look forward to that. I would like to commend that the World Bank and Pakistan, as I said before, are doing a great job with getting civil society, but we would like to have Terms of Reference, formal Terms of Engagement that we would like to see not at the local level, not the Pakistan level, but also at the global level, and also having a say in the decision-making.
Mr. Imata - Okay. So, the question is, what can you do to make it happen.
Question - I am from Japan. We welcome the remarks that you made at the UN General Assembly this year for the funding mechanism to enable donors to meet the urgent needs related to MDGs 4 and 5. My question is on the funding mechanism. Could you tell us more about this funding mechanism that you mentioned to meet the needs of MDGs 4 and 5?
Mr. Imata - One last question.
Question - First, I would like Dr. Kim have one and a half hours with us. I appreciate having this kind of dialogue. My question is that we are also learning from reporter to concentrate on the poverty alleviation for World Bank in the future. So, I think this is really good news because the World Bank also [?] important law in China for poverty alleviation. In fact, if you use one day 1.25 dollars per person for the expenditure in China, China still has 170 million people on the poverty line, which accounts for 10 percent of the world. So, I think it is really urgent for China should be considered poverty alleviation.
But the problem is that the World Bank—
Mr. Imata - Can you please get to the question?
Question - The problem is the World Bank how to consider regarding poverty alleviation because China can learn from other countries and China’s experience also to share with other countries.
Mr. Kim - So, you have allowed me to address two of my favorite topics, health and education, and, of course, poverty.
So, how can I say this? I basically worked my entire adult life to increase the right to health care. Let me be specific. To take on the issue, we were asked to take the lead on improving the response to MDGs 4 and 5. We have not actually decided what the mechanism is going to really look like. Our recommendation is that it go through IDA, our concessional loan window for the poorest.
What we can do goes through a process where we can be clear that the funds are for addressing MDGs 4 and 5, but through that fund the countries very clearly are in the lead. They are the ones who make the decisions and shape the programs, and that is very important. So, this is one concrete thing that we are doing. This is something that we decided on in my first hundred days that we are going to step up on MDGs 4 and 5.
But let me also challenge you. I think that it is a mistake just to focus on access, because I have been to too many countries in the world where people have access to absolutely horrendous care. We have to do something about improving the overall quality of care. So, it has to be access, quality, and also cost. We have to think about cost. We have to think about making it affordable.
Now, I have had some recent experiences that have been extremely encouraging. One, when Rwanda initiated its health insurance system, frankly, those of us working there were really skeptical about whether it would work, but it has worked far better than we had ever imagined. There was a combination of people paying in, government support. Over time, the aim of President Kagame is that there would be enough growth in the private sector, enough job creation so that people could afford to pay their insurance fees. Of course, health care would be free at the point of care, but there would be a sustainable system over time.
Now, over time, and watching this space and working in it for a very long time, I have come to the conclusion—and Christine remarked on it—look, if health care systems all over the world are always completely dependent on aid, then you are going to have a very uneven system. So, I think that investments by donor countries in health care are critical.
But the task for the World Bank is very specific. The choice that the World Bank made several years ago to focus on health systems was absolutely the right choice. You know, I have done a lot of work in HIV and tuberculosis and I have worked with many people in the room around those issues, but the great secret behind all of that is that one of the reasons we focus so much on tuberculosis and HIV is that it forced you to put a health system in place.
Everywhere that I have worked with Partners In Health, we have focused on providing comprehensive health care services that are integrated. In the places where we are most serious, that we have the largest projects, we have no maternal deaths because maternal mortality and the approach to it is far less a medical intervention problem than it is a logistical problem and we have worked hard to put those pieces in place.
So, when I challenge you, what I am saying is do not just stop at access to health care. Say something about the quality; say something about the need for the global community to stop insisting on my disease and insisting instead on building systems that can handle all of these different diseases. What is really critical for maternal mortality? Roads, access to blood supplies, communications. These are things that we are really good at at the World Bank. They are fully a part of a functioning health care center.
You know, there was basically no attention to global health in the late 1990s, and I was there and I saw it. We had to bring the attention of the world to these diseases by focusing on specific ones. The horror of what was happening around HIV, TB, and malaria was so clear. We just needed to bring that to the attention.
For me, for Partners In Health, for my colleagues and others, this was always about health systems. This was always about building systems that will provide the full range of services. When you are a health care worker in the field and someone comes to you and you say, “Okay, we are a HIV program,” and they say “But, you know, I actually broke my leg” or “I have malaria,” “I am sorry I cannot help you because we are an HIV program,” that does not work. For me, it never did, and it usually does not work for people in the field.
So, on the different funding mechanisms for health care, we have to now sit down and begin putting plans together so that there are functioning, effective, quality health care systems in every country, and then let us solve the access problem. It is going to look different in different places. I think the solution that Rwanda came up with was brilliant, but you have to remember it was risky and most people thought it was not going to work.
So, now that we have that experience, the question for us is what is going to work in all the different parts of the world. I think we have to remain a bit agnostic about exactly how we are going to pay for all these systems. What we have now in some places, with an HIV program, there will be one NGO doing PMTCT, another NGO doing testing, another NGO doing treatment for a particular population, this is wasteful. This is creating unnecessary administrative structures when in fact countries have to be in the lead and these systems have to work for everyone.
That is my personal commitment. It fits beautifully with the World Bank’s commitment to building health systems. You are going to see us get very, very serious about pushing the global community in this particular direction.
In terms of the Pakistani situation, I was just horrified when I heard about this. It proved to me once again that our work in tackling these two issues of gender equality and access to education is critical.
Again, how is it possible that we do not understand the development and economic implications of educating girls? This is a piece of data that has been so clear for so long. I will tell you this. When I was at Dartmouth, one of the questions we asked is how do young people learn. The great academic institutions of the world, if you ask them, they will say, well, of course, they learn. We are who we are; of course they learn.
It turns out that the science of learning has not penetrated very deeply into most educational institutions. For example, there has been study after study after study that shows that in first-year students’ physics classes, lecturing is very ineffective; in fact, it may even be damaging. Yet everyone lectures. Why is that? Because we have not let the science of learning penetrate into even the great universities.
I think the opportunity in education is that there are new technologies, new approaches to learning that could allow us to leapfrog generations and get even better than even some developed countries in educating young people.
Again, that is my personal commitment. I think we have a great team, our education team led by Beth King. I think we have great team. We are very aggressively going to move toward ensuring that access to education is the first step, but what we really want to do is ensure that everyone is learning. Again, there are just wonderful new innovations, Sal Khan and the Khan Academy. There are just simple kinds of technologies that we can implement.
You know, many people thought that the answer was a laptop for every child, a very nice idea, but it is not the hardware; it is the software and it is the learning that is critical. At the World Bank, those are going to be top priorities for us.
Unfortunately, I have to go to my 15th event of the day right now. Let me just say that it was privilege being here with you. I am very grateful for the depth of the engagement that we have had. I want you to know that Christine and I are working very closely together. There are some difficult things that we have to do, because at the end of the day what people want are good jobs so they can participate in society and live with dignity.
So, we are very, very committed to ensuring that people have education, health care, social protection, because in fact those inputs are critical to lay the foundations for economic growth. We also have to focus on ensuring that, especially small and medium enterprises, especially women-owned small and medium enterprises, are able to grow and grow quickly and create the kind of jobs that people want and that people need.
I have just started on this journey, but I look forward to it. It is not often that an Activist from civil society gets to run the largest development organization in the world. I guarantee you I am not going to let this opportunity slip through my fingers. I am going to push as hard as I can to achieve the goals that I think we share.
Mr. Imata - Apologies to the fact that I could not get to your question, but it is very, very heartening to hear lots of personal commitment from President Kim. Thank you very much. I thank all of you for your participation. Wonderful.
The reception is happening right now. If you walk that way and go out of the room, you will be welcomed by the reception. Thank you very much for your participation.