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DEVELOPMENT COMMITTEE (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund On the Transfer of Real Resources to Developing Countries) FOR OFFICIAL USE ONLY DC/2000-24 January 11, 2001 RECORD OF DISCUSSION OF THE SIXTY-SECOND MEETING OF THE DEVELOPMENT COMMITTEE Chairman: Yashwant Sinha, Minister of Finance, India Prague September 25, 2000 Contents Page No. Plenary Session Introductory Remarks by the Chairman 1 Statement by the Managing Director of the Fund 2 Statement by the President of the World Bank 4 Statement by the Chairman of the Group of Twenty-Four 7 Chairman’s Summary of Main Points Made in Ministers’ Circulated Statements 8 Prepared Statements Circulated by Members 11 Prepared Statements Circulated by Observers 123 Annex A Agenda 145 Annex B Communiqué 147 Annex C List of Participants 151 * * * This document has a restricted distribution and it is requested that it should be used by recipients on a similarly restricted basis and not be published, quoted or cited. i Plenary Session Speakers Page No. Mr. Köhler, Managing Director, International Monetary Fund 2 Mr. Wolfensohn, President, World Bank 4 Mr. Saito, Chairman of the Group of Twenty-Four 7 Chairman 9 Statements by Members Mr. Al-Sayari* (Saudi Arabia) 11 Mr. Couchepin (Switzerland) 14 Mr. Eyzaguirre (Chile) 19 Mr. Fabius (France) 24 Mr. Fazio* (Italy) 28 Mr. Giordani (República Bolivariana de Venezuela) 33 Ms. Herfkens* (The Netherlands) 37 Mr. Kemp* (Australia) 42 Mr. Khristenko (Russian Federation) 45 Mr. Malan (Brazil) 54 Mr. Martin (Canada) 59 Mr. Mbumba (Namibia) 67 Mr. Murata (Japan) 72 Mr. Oulalalou (Morocco) 77 Mr. Prijadi (Indonesia) 79 Mr. Reynders (Belgium) 83 Mr. Saif (Bahrain) 87 Ms. Short and Mr. Brown (United Kingdom) 89 Mr. Summers (United States) 96 Ms. Sydnes (Norway) 104 Ms. Wieczorek-Zeul (Germany) 109 Mr. Xiang (People’s Republic of China) 114 Mr. Zongo* (Burkina Faso) 117 Statements by Observers Development Assistance Committee (DAC) 122 Islamic Development Bank 128 European Commission 133 International Labour Office 135 United Nations 138 United Nations Commission on Trade and Development 141 * Alternate 1 RECORD OF DISCUSSION OF THE SIXTY-SECOND MEETING OF THE DEVELOPMENT COMMITTEE The Joint Ministerial Committee of the Boards of Governors of the World Bank and the Fund on the Transfer of Real Resources to Developing Countries – the Development Committee – held its sixty-second meeting on September 25, 2000, in Prague, Czech Republic. The meeting comprised a short plenary session, a restricted session and the Chairman’s lunch for Members. The Members circulated their statements in advance. The plenary session started at 9:00 a.m. and ended at 10:00 a.m. Introductory Remarks by the Chairman The Chairman made the following introductory remarks: Distinguished Members of the Committee and representatives of observer organizations, Mr. Wolfensohn, Mr. Köhler, ladies and gentlemen: It is my privilege to call to order the 62nd meeting of the Development Committee. Let me first express my appreciation and gratitude to the Committee for selecting me to be your Chairman for the next year. It is a great honor and I will hope to emulate the outstanding leadership shown by my predecessor, Thailand's Minister of Finance Tarrin Nimmanahaeminda. I regret he cannot be with us today, but he is instead defending his national budget before the upper house of Thailand's parliament. Given my own experience, let's say our own experience in such matters, I am sure he would be rather here than there today. In my role as Chairman I would also like to offer a special welcome to the new Managing Director of the Fund, Mr. Horst Köhler, who is also attending this meeting as his first meeting in his new role. Your predecessor, Michel Camdessus, was a great supporter of the work of this Committee, and we look forward to a continued close partnership with you. I also welcome the Committee's members and their delegations and extend my special greetings to our new members, to the Chairman of the Group of Twenty-Four and to the observers of the Committee. We are happy to have you with us today. I think we had a very good joint session of the International Monetary and Financial Committee (IMFC) yesterday evening to discuss Heavily Indebted Poor Countries (HIPC), but there is still much for us to do today, and so I think we should get right down to business. Now I shall proceed to the adoption of the agenda. The provisional agenda for the meeting has already been circulated. I assume that we can take that agenda as adopted. The agenda is adopted. Let me summarize briefly the arrangements for our meeting today. In a moment, I will ask Mr. Köhler to address us. We shall then hear from Mr. Wolfensohn, followed by the Chairman of the Group of Twenty-Four. After that, I will summarize the main points drawn from the members' circulated statements. The restricted session will follow immediately after this, from about 10:15 a.m. to 12:30 p.m. in the Panorama Hall on the first floor. There we shall focus on agenda items Poverty 2 Reduction and Global Public Goods and Supporting Country Development: World Bank Role and Instruments in Low- and Middle-Income Countries. The luncheon meeting for members will be held in Club A on the first floor from about 12:45 to 2:30 p.m. The press conference will be in the Small Hall at 4:30 p.m. Interested members of delegations are welcome to attend. Now let me turn to the statements by heads of our institutions. I would now like to give the floor to Horst Köhler, Managing Director of the IMF. Statement by Mr. Horst Köhler, Managing Director of the International Monetary Fund I would like to begin by expressing my appreciation to Minister Tarrin for his valuable leadership to the Committee as its Chairman during the past two years. I also welcome Minister Sinha as our new Chairman. I got to know Mr. Sinha during a visit to India some two months ago. I was impressed with his balanced view of the need to open India to a globalized world while being aware of and trying to deal with a very difficult situation of poverty in his own land. This was very helpful and gave me an insight. Since I arrived at the IMF, I have already met some of you in my visits to developing countries. These visits impressed me most because there was not a climate of just asking just for, for instance, money and good deeds, but also a climate of openness, of preparedness to listen to each other. This is my understanding of my own role as Managing Director of the IMF. We can start identifying the reforms that are needed, changes in the international institutions by listening better to each other, and particularly listening to the representatives of the developing countries. That is my commitment. Yesterday in the International Monetary and Financial Committee (IMFC) of the IMF I got an endorsement of what I call my vision for the Fund. In short, I believe that we have to strengthen global institutions like the IMF and the World Bank so that they can be a very active part of the international effort to make globalization work for the benefit of all. Jim Wolfensohn and I share this common commitment and conviction. In my vision, I particularly believe that we have to think through again the notion and concept of ownership. If our members are not fully familiar with and do not fully accept what could be good policy advice, it will not work. Therefore, I made clear to the IMFC that while the IMF in its operations has to stick to conditionality, there is no intention, and there should be no intention, to micromanage. Rather, it is better to listen, to let the countries themselves decide what is good for them, but based on a common understanding of shared responsibilities. This approach will, I hope, strengthen the partnership of our institutions. I believe that for the role of the Fund, and I am sure that is the same for the Bank, our truly universal membership is an asset to cope with the challenges of globalization, to discuss the situation and find common solutions. I want to strengthen this spirit, this culture of listening, of finding solutions that are of interest of all of the members. In this context, I would also like to assure you that, of course, I 3 am concerned about oil price developments. And I do think that the IMF should have an idea of how it can respond to them. Our idea is to have flexibility, particularly in the PRGF Facility, in how we respond to this development. I was also very encouraged when I met the chairs of the developing and emerging market countries of the IMF for dinner and found out that there is more awareness of a common shared responsibility than may appear to us from the newspaper headlines. The oil-producing countries know that a high oil price is not ultimately in their interest. The oil-consuming countries know that they should not only cry out when the price is high, but they should also comment when the price is too low. Based on this, I do think that it should be possible to find the solution to bring the oil price down to a sustainable, reasonable level, and thereby avoid an interruption of the positive economic outlook for the world economy. As you know, as the new Managing Director of the IMF I thought it would be very important for me to get to know Jim Wolfensohn better.