Statement by H.E. Fathallah OUALALOU
Speaking on behalf of Algeria, Ghana, Islamic Republic of Iran,
Joint Meeting of the International Monetary and Financial Committee
Washington, D.C., April 29, 2001
The theme of this third joint meeting of the International Monetary and Financial Committee and the Development Committee of "fighting poverty and strengthening growth" is pertinent for a number of reasons:
1. Because it reminds us that the ultimate objective of the actions of our institutions must be the well-being of the people.
2. Because it points to the need for close and effective cooperation between the Bank and the Fund, given that they share the same objective.
3. Finally, because it underlines the link that exists between fighting poverty and strengthening growth.
I am delighted at this development and this collective awakening, one of the first manifestations of which was the initiative to provide debt relief to the heavily indebted poor countries.
Since it was launched in 1996, this initiative has developed considerably, to the point where 22 of the 41 eligible countries have reached the decision point.
While we can be pleased with the progress made, we must also express some fears and concerns.
- First, we believe that the financing arrangement for this initiative should be reviewed so as to fully integrate the debt relief needs of the heavily indebted poor countries that are in protracted arrears, often because they are in the throes of conflicts, with the attendant disastrous human, economic and financial results. The rapid extension of this initiative to these countries can ease their precarious situation and facilitate their integration into the world economy. Furthermore, special attention should be given to the problems of the highly-indebted poor transition countries.
- Our second concern relates to the fact that since the initiative was launched, only one country has reached the completion point. This should act as a call to the international community, and our two institutions in particular, to redouble the efforts to speed up the implementation of this initiative. We have high hopes in this regard, owing to the simplification and streamlining announced by the IMF with respect to the conditionality applicable to its facilities, including the Poverty Reduction and Growth Facility, and the efforts under way to enhance individual countries' ownership of their poverty reduction and reform programs. We also are hopeful of seeing the Fund and the Bank improve the coordination of their interventions in the poor countries, avoiding cross conditionalities and adapting their activities to the specific circumstances in each country. This is the best way of stepping up the implementation of the initiative and helping the poor countries achieve debt sustainability.
- Finally, in addition to their efforts to speed up implementation of the initiative, the various contributors should take action to ensure that disbursements are made in a timely fashion and that the resources of the institutions also called upon to contribute are appropriately replenished. Likewise, I think it imperative that the regional financial institutions, particularly the African Development Bank, receive the necessary resources from the contributing countries to enable them to do their part in accelerating the implementation of the initiative.
More generally, we believe that the role of the World Bank Group must continue to be focused on poverty reduction throughout the world. In this regard, and in the awareness that 80 percent of the poorest people of the planet live in middle-income countries, it is important that these countries continue to benefit from direct loans from the Bank. The Bank should respond to the needs of the middle-income countries by finding the appropriate balance between project loans, structural adjustment support, and financing for sectoral reforms. Moreover, the Fund and the Bank must act more strenuously as a catalyst of private capital flows toward the middle-income countries. In this regard, we applaud the decision of the Managing Director of the IMF to create an International Capital Markets Department, and we very much look forward to this department's provision of support to all developing countries to facilitate their integration into the international capital market.
Furthermore, the growth of the developing countries overall is not dependent solely on financing resources, but also on the external context surrounding their economies.
We believe that the opening of the markets of the industrial countries to the exports of the developing countries, including agricultural products, is likely to help accelerate growth and reduce poverty in these countries. The recent initiatives of a number of countries and regional groups are encouraging in that they favor the integration of the developing countries into the global economy. We would like to see these initiatives applied to all the developing countries. We welcome and encourage the initiatives taken by a number of African countries to promote regional corporation with the assistance of the international financial institutions.
Finally, for the least developed countries and middle-income countries alike, the measures aimed at increasing the flow of resources in their direction must include an increase in the flows of Official Development Assistance. We must reverse the trend in this area so that the objective of 0.7 percent of GNP set by the United Nations may be reached and international development objectives achieved.