Transcript

April 20, 2013
Washington, DC

PANELISTS:

Marek Belka, Development Committee Chair
Jim Yong Kim, World Bank President
Christine Lagarde, IMF Managing Director

MR. MILLS: Very good. Thank you all for coming to the closing press conference for these meetings.

Each of our participants will give a short statement and then we will be happy to take your questions.

If you could please identify yourself when asking a question and your news organization, that would be great.

Chairman Belka.

MR. BELKA: Thank you.

Ladies and gentlemen, welcome to this press conference on today's Development Committee meeting.

I am pleased to be joined by Jim Yong Kim and Christine Lagarde.

As President of the World Bank Group, Jim has brought renewed enthusiasm for its core mission, a world free of poverty, and I mean it, "enthusiasm."

The way Development Committee reacted to the two main objectives set out by President Kim cannot be described otherwise but a resounding, unequivocal support.

Today, the Development Committee endorsed the two goals that will guide the World Bank Group to achieve its mission.

First, we believe we have a historic opportunity to end extreme poverty within a generation. The global target of reducing the extreme poverty rate, the number of people living on less than $1.25 a day to 3 percent by 2030 is ambitious. Achieving it will require strong growth across the developing world as well as translation of growth into poverty reduction to an extent not seen before in many low-income countries.

We have equally endorsed the second proposed goal to promote shared prosperity. This will entail fostering income growth of the bottom 40 percent of the population in every country. Sustained economic growth needs a reduction in inequality; shared prosperity means creating opportunities for all citizens, promoting gender equality and focusing on those who, although not currently poor, are vulnerable to falling into poverty.

These two goals we endorse today will lay the foundation of a unified World Bank Group strategy that we will consider when we meet again at this year's Annual Meetings here in Washington.

Thank you.

DR. KIM: This is it [indicating 2030]. This is the global target to end poverty.

Thank you for coming and I just want you to know that, less than hour ago, the Development Committee endorsed this target of ending poverty by 2030. It's a historic moment for an institution and for the world.

For the first time in history, we have committed to setting a target to end poverty. We are no longer dreaming of a world free of poverty, we have set an expiration date for extreme poverty.

With commitment, cooperation and the vision of leaders from around the world, we have great faith that we can make it happen. This will be hard work. The target of 2030 is closer than you think, just 17 years away. We will bring the urgency of the task to the world every year by reporting on our progress, country by country, on the rate of extreme poverty around the world, as well as the changes in the income of the bottom 40 percent in each country the people who are vulnerable, that are slipping back into poverty in the event of losing a job or suffering a health crisis.

We will learn every year where we are making progress and where we are not.

I also very much welcome the Development Committee's call for robust replenishment of our fund for the poorest, IDA, with strong participation from all members.

These Spring Meetings, my first as World Bank Group President, had several other major highlights.

One was the uplifting presence and participation of UN Secretary General Ban Ki-moon, who joined me for several high-level meetings and events and who, most importantly, underscored the great importance of the UN system and the World Bank Group working hand in hand to end poverty. We can be much more effective and efficient if we combine forces to address political, security, and economic development issues at the same time. This is our promise to the world.

A second key issue at these meetings was the attention paid to climate change. As I talked about in several meetings, we need a plan that is equal to the challenge of a disastrously warming planet.

A third important part of these meeting was the focus on the need for countries to invest more in health and education. Without providing universal access to education, without improving education systems so that all children not only attend school but learn in school, and without building health care systems that truly provide quality care to all people, countries will miss the opportunity to make the critical investments in human capital that will determine their competitive position in the global economy.

Investment in people, especially in health and education, is the right thing to do, both from a moral and a strategic perspective.

Thank you very much.

MS. LAGARDE: Thank you very much.

Good afternoon to all of you.

I would like to thank both Chairman Belka and my colleague, President Jim Kim, for their achievement. It's clearly a very, very good news, and I would like to share their enthusiasm, as well, and contribute to the extent that the IMF can in that respect.

You know, they say that timing is everything. Well, from a growth perspective, timing couldn't be better, Dr. Kim, simply because at the moment, when you look at growth around the world, growth progresses at a three-speed pace, and the fastest of the group are both the low-income countries and the emerging and developing countries.

And what a good moment to actually decide to reach those goals that you have identified, better moment than when you have actually good growth and when you're progressing and when you can decide to allocate the fruit of growth where it's appropriate.

What does the IMF do--what it will do in that respect? Well, first of all, we are improving our lending facilities to low-income countries, that has been approved about a month ago now.

We will provide increased and more focused support to small states who form a real cluster from an economic point of view who share the same difficulties and the same vulnerabilities.

And we will develop capacity building which, at the moment, the low-income countries and the emerging and developing countries are the biggest consumers in our membership.

There are four areas where we will also support actively, by policy support. One is managing natural resource better, because that's a trap in which we certainly don't want emerging market economies, let alone developing countries and low-income countries, to fall.

We will continue to give better and more policy advice on job-friendly, inclusive growth, which we regard as critical and which is a topic that we share with Dr. Kim, particularly when it comes to women.

We will also focus our support and our technical advice on the development of financial sector, because when economies grow at that pace, there's a clear direction of capital flows towards those economies, and they have to be absorbed properly by financial sectors.

And clearly, we will continue the work that we have started concerning subsidies and the use of subsidies in relation to both climate change and increased revenue for the states that are undergoing development.

Thank you.

QUESTIONER: I would ask Dr. Kim, first, did you convey and stress a message to the finance ministers and central bankers that they would not forget poverty reduction and better sharing prosperity when they leave Dulles Airport?

Secondly, how can World Bank help mobilize resources and help create a better environment for poverty reduction and job creation in South Asia, and the Sub-Sahara nations, in particular, two areas you highlight as critical to poverty reduction in the coming decade?

Thank you.

DR. KIM: Thank you very much.

Yes, we actually said that they could not leave Dulles Airport until they pledged again that we were going to end poverty and build shared prosperity.

You know, we are very focused on South Asia and Sub-Saharan Africa, and let me just give you two concrete examples of how we're moving in the direction of really working on those two areas.

For example, in the presentation of a strategy for India, this was the first time that any country strategy was built around these two principles of ending poverty and building shared prosperity. So, the amount of investment that went to the poorest states was increased as a result of the focus on ending poverty.

And also, there was a very clear sense that we needed to not only utilize the official development assistance, but also to ensure that we were moving toward a kind of development, especially in the business community, that would lead to more jobs, especially for the poorest and most marginalized.

In Sub-Saharan Africa, we know that we've got to tackle the largest states, but also the ones that are in fragile or conflict-affected state. And so, we've recently announced that the Secretary-General, Ban Ki-moon, and I will be traveling to the Great Lakes Region, in which we will put concrete proposals on the table to build political, security and economic development solutions that are linked and, in that way, hope much more effective.

We think that economic growth in those Regions supplied by badly needed energy that we think we can invest in and increase the supply of will absolutely support the political and security arrangements that exist now and need to be scaled up.

QUESTIONER: First of all, I have two quick questions, the first one is to President Kim: according to one of the latest units of report in Italy, which is one of G-8, G-20 member, 70 percent of the kids lives under the poverty threshold, and 11 percent does not attend any kind of school. I want to ask you how is possible that such an advanced country--happens something like this.

And the second question, which is linked to the first one, is to Madam Lagarde: After several tries, the Italian Parliament elected Giorgio Napolitano for a second mandate as Italian President. I would like to have a comment, if is possible, from you.

DR. KIM: Thank you very much.

We're not working directly in Italy. Of course, Italy is a strong supporter and donor country to the World Bank Group.

But when we talk about ending poverty and building shared prosperity, our concern is with poor people everywhere.

Now, I haven't seen these data on Italy, but what I would say is that, as someone who has worked in every country--in many, many countries in the Western Hemisphere, including in the poor regions of the United States, including in Latin America, Africa, and even Russia, poverty is something that every single country in the world needs to be concerned with, and there are very few countries in the world that have completely eliminated poverty.

And moreover, there are many, many countries in the world who are still struggling with vulnerability, the possibility of falling into poverty.

We celebrate this focus on poverty and we encourage every single nation in the world to begin thinking about things like how can we end poverty, and also questions of whether the bottom two quintiles of the population are truly participating in economic growth.

And we would argue that our focus is on developing countries, our focus is on emerging economies and the poorest countries, but it's a legitimate question and an important task for many, many countries in the world.

MS. LAGARDE: Thank you very much for your question, and thank you for informing me of that reelection. I would like to offer my sincere congratulations to President Napolitano. He's a tremendous asset to Italy and, having seen him in action, I am delighted that he can push the limit of retirement as well as he does.

I would like to add one point to the question of the Chinese gentleman who spoke earlier, because you did ask President Kim whether he talked to the finance minister, and he was probably too modest to say so, but I heard him very specifically speak to the finance ministers and the Governors of the central banks to say how climate change, how health, how education were critically important not just for development ministers but also for finance ministers, and he was very eloquent in that respect.

QUESTIONER: A question regarding the Caribbean, a lot of the small states--or we're all small states, basically, in the Caribbean. We are classified--some of us are classified as middle-income countries. Just recently, St. Kitts and Nevis was classified as a high-income country, which is a very small country.

It's a misnomer of sorts because these are highly indebted countries that really have difficulty reducing their public debt.

How can--is 2030 still a realistic target to help reduce poverty in these countries?

And Oxfam, one of the civil society groups here have applauded you, Dr. Kim, for the commitment as well as Madam Lagarde, on your commitment on poverty reduction, but they expressed concerns about the lands being taken away in some countries as a result of aid and money coming from the World Bank.

How do you respond to this?

DR. KIM: So, on the issue of land, we are very expressly and on record as being against speculative land-grab kinds of situations, and we have looked very carefully at our portfolio, and will continue to monitor very carefully so that does not happen with our funding.

You know, a target is not worth setting unless it stretches you and forces you to change the way you do work and get better at what you do, and that's exactly the purpose of setting this particular target.

And I would just say that we maintain together, Christine and I, a very deep concern about the situation of countries in the Caribbean. And in fact, we just worked very closely together to put together a program for Jamaica that we desperately want to be successful. It's going to be challenging, there's no question that it's going to be challenging, but this is precisely how we should work together, that when countries are in very serious trouble, of course, no one has the global reach and the resources of the IMF, and we have a lot of experience in helping countries tackle specific issues like public sector expenditures and improving the business climate.

So, we remain committed to every country, and that's part of the message today, that if we reach less than 3 percent poverty but fragile and conflict-affected states are suffering rates of poverty in the 30 and 40 percent region, we will not feel successful. So, we have to be both focused and make sure that we focus on those areas where the most poverty exists, but at the same time we can't forget the smaller countries.

QUESTIONER: Good evening. I want to ask Mr. Jim about--if you intend to involve in Egypt's process in implementing the new system of targeted subsidies other than the other system. You know, it is said that there is a big difficulty because of the database, there is no database in Egypt, and some concerns about corruption in implementing it by itself.

Do you have anything to say about this? Can you be involved in it--have Egypt asked for it or what happened?

DR. KIM: Yes, so, one of the things that we believe is that Egypt needs to make a commitment to removing especially some of the fossil fuel subsidies.

And so, our role is to be able to help with very targeted measures so that we protect the poorest. I mean, that's what we do, and we're prepared to follow in the footsteps of the IMF once an agreement can be reached on the standby agreement to provide funding specifically for social protection of the poorest so as to soften the blow of something like fossil fuel subsidy removal, which we think is important both for the environment and for the revenues of the government.

MS. LAGARDE: You know what, because I know you are very interested in that particular topic, I will follow from Dr. Kim.

There is expertise at home in Egypt that is based on the Smart Card system, that is difficult to put in place that will take time, but which clearly is intended to deal with the issue of where do subsidies go and how helpful are they and in what amount do they go.

So, I think that it will be both using the local expertise that has been developed, plus the expertise that can be contributed by international organizations such as the World Bank, as Dr. Kim just indicated, or the IMF as we have it. And it's by packaging that expertise that we can help.

QUESTIONER: My question is, has there been a sense of new urgency or serious urgency regarding North Africa, promoting private sector investment, especially in the countries of Libya, Algeria and Tunisia that seem to be at very unstable and high political risk at this point because of the lack of private sector investment, especially infrastructure?

A lot of--you know, we had Ambassador Stevens, we had an embassy, there's been six months lost. Has this been a key topic and what kind of steps are going to go forward at this point? Thank you, sir.

MS. LAGARDE: You know, clearly, your question is very focused. I can tell you what we are doing.

We do not bring in private sector investors, foreign direct investors, because this is a matter that is best dealt either--you know, State Secretary, for instance, who eventually went to Egypt in order to engage the private sector to invest and to look at business opportunities.

But what I can tell you is that, in Libya, for instance, we do a lot of technical assistance, a lot of capacity building for the country, not that it's a country that needs financial support, clearly, but it needs a lot of capacity building and we are doing everything we can to help them out in the process.

Syria is obviously a much more complicated and much more unsettled situation at the moment, as we know, and a terrible tragedy as well.

DR. KIM: Let me tackle the situation, for example, in Tunisia. I mean, this is a government--I mean, this is a country that, for such a long time, there was just no trust among citizens and certainly among outside investors in the private sector, that so much of it was tied up with the Ben Ali Family.

And so, we're very much working in Tunisia on trying to do basic things like making sure that there are rules and that the rules are fair, that they're consistent and that they're enforced.

We need to increase private sector investment in Tunisia. And you know, at one point, it was a very attractive place for investment, but the lack of trust in the ability of the government to create a level playing field went so far that we're concerned about it but we're working very aggressively through the International Finance Corporation to help Tunisia build a better environment. That is what they need to create jobs. You know, one of the disturbing facts coming out of Tunisia is that the highest rates of unemployment are among the college-educated. So many of college-educated individuals in Tunisia just didn't trust going into the private sector and many of them went into the government sector.

So, we hope to rebuild the business climate in Tunisia. It's definitely what they need to move forward with their development process.

QUESTIONER: Mr. President, first of all, congratulations, your first meeting here.

Madam, we meet every year here, year after year. We talk about poverty, but this time I didn't hear much about corruption.

My question is, I'm sure you will agree with me, that poverty is connected with corruption and unless you end corruption, poverty will not be ended in the world because the money you give to the countries, to governments, it doesn't reach to the people, because there is no accountability. Let's talk about India, like you said, about focusing on South Asia, and you must be now going to the region. I hope you will visit India and some of those projects you gave money for, and there is no accountability, people don't get money.

Like same thing in Pakistan, people are crying they don't get--it has to reach to the people in order to end poverty, corruption, you should be focusing here, I hope next year, maybe not this year.

We're talking about corruption, poverty, crimes against women, gang rapes around the globe, police brutality, we don't hear much about that, like, in India, it was international news about gang rapes and all that is going on.

This is the work that we should be focusing here. I hope you will address this issue.

Thank you.

DR. KIM: Sure. So, I just want you to know that at the World Bank we have a very clear policy. We have zero tolerance for corruption.

In fact, related to a project in Bangladesh, we just very recently debarred a company. In other words, they cannot participate in any World Bank-funded projects for ten years, one of the longest debarments involving many subsidiary companies.

And it was difficult, because the development impact of the bridge that we were about to build would have been enormous, but our policy is very clear that we have to absolutely have zero tolerance for corruption.

The other thing that I think is really important is that in India today, the Minister of Finance, Chidambaram, told me about a program in which they are using biometric technology to ensure that money for the people goes directly to the people. For all kinds of reasons, money can get caught up, but if there's a system, electronic system, to move money directly to the people, it will dramatically improve their ability to reach even the poorest states.

So, I found that extremely exciting. I think it's one of--the great Nandan Nilekani one of the founders of Infosys, is working on this project.

We think it will have a great impact and, if it does, we're very excited about potentially using it in other countries.

QUESTIONER: A question for Dr. Kim and Madam Lagarde: You had back-to-back news conferences last Thursday--I know it's a while ago, but I recognize that Dr. Kim, you were talking about the need to boost growth and job creation in developing countries, and straight after that, Madam Lagarde was talking about the same issue but referring to advanced economies.

Are these challenges essentially the same in these areas or are they different and how would you advise--you know, I mean, as you look at this, is it a different process?

DR. KIM: Let me take a quick shot at it.

You know, we are working in Greece, and in Greece we're focused on a very specific topic, which is how can you improve the business environment so that there's more investment and job creation?

What we work on in just about every country in the world are two things that every country has to face, and one is, how can you use evidence to rationalize your public expenditures so that they have the maximum intended effect?

And on the other hand, what can you do to improve the business climate and also think about medium- and long-term investments in infrastructure and human capital that will secure not only short-term growth but medium- and long-term growth.

These problems are, I think, shared across every country. One of the things that's important to note, though, is that, for us, every country is different. We work in high middle-income countries who are, for example, facing the escalation of health care costs among the high-income earners in their countries. And we also work with fragile and conflict-affected states that barely have enough electricity for 15 percent of the population.

So, those challenges change from place to place, but every country has to face the public expenditures and rationalizing them. And also, building growth, especially in the private sector.

MS. LAGARDE: Do you want me to follow up on that, as well?

It's actually one of the themes that transcends all the various sectors. You can have a growth, very, very high, very low, be lagging behind or leading the back, you have jobs concern.

That was a clear point that was made this morning. I'll give you a couple of examples in common. A country like Japan, third largest economy in the world, and many of the low-income countries, particularly in the Middle East and Africa, access of women to the job market and how it's going to make a difference, very advanced economy, very low-income countries.

One particular area of concern that we have for some of the emerging market economies and developing countries is the informal job market. That's a big issue from the pure labor management point of view. It's also a big issue from a state revenue point of view. Those are quite specific to the developing and the emerging market economies.

But if you compare the unemployment rate of a country like Spain with the unemployment rate of a country like some of the MENA transition countries, you are pretty much at the same level.

So, it's very much common to all of them.

MR. MILLS: Very good. Thank you very much.