The Hosts
Peter Woicke,
IFC Executive vice-president and managing
director of the world bank
I think the issue in the World Bank Group is really whether it has recognized the transition that is going on from the public to the private sector. The private sector is four or five times as big as the public sector today. I wonder whether the World Bank today or the World Bank Group has made enough transition to recognize the importance of the private sector today.
The Bank is struggling because the mid-income countries don't borrow any more – China, India, Russia: they don't need the money, but they still need some advice on social development, and so on. The transition for the Bank is going to be how to remain relevant in giving advice and leveraging the expertise they have – through technical assistance – aside from just necessarily lending.
The Bank is facing important competition, not from other multilaterals but from NGOs. Look at the Gates foundation or Oxfam. They can deal with local governments and local issues directly without going through governments. The Bank is disadvantaged there because it always has to go through governments.
Trevor Manuel,
South African finance minister and chairman of the Development Committee
The proposed agenda for the Development Committee will address the following issues during this year's annual meeting:
1. Aid effectiveness and financing modalities
2. Strengthening the foundations for growth
3. Investment climate and private-sector development
4. Infrastructure development
5. Debt and debt sustainability
6. Voice and participation of developing countries and countries in transition.
At the IMFC, we will consider the role of the Fund in low-income countries, which also encompasses the issue of debt relief, as well as financing modalities for achieving the Millennium Development Goals. I expect also that we will discuss the Poverty Reduction Strategy Papers and how to improve the implementation of this approach in low-income countries. Apart from that, there will be the usual discussion around the global economic outlook, surveillance and crisis prevention and resolution.
Lim Hng Kiang
Singapore's minister for trade and industry and chairman of the 2004 annual meetings
Many of today's global companies had modest beginnings. With the right strategies and an entrepreneurial spirit, they overcame the challenges of limited resources to become corporate giants. Similarly, emerging economies face issues of limited resources and competing needs. Relying on limited savings to fund longer-term investment needs such as education, public infrastructure and technology could result in slow or stagnant economic growth.
Globalization presents growth opportunities for emerging economies. By tapping global financial markets, capital can be allocated to its most productive use, and governments can boost economic growth. Investors in these emerging economies too can benefit from the global market, by getting better returns and diversifying their risks across a wide spectrum of investment opportunities, across various regions and asset classes.
However, globalization is not without risks. Events in one country can have widespread and magnified effects across the globe. Instead of being deterred by such risks, emerging economies should work together, strengthen cooperation and enhance regional financial surveillance measures.
Cultivating relationship and partnership with other countries can also help emerging economies grow in today's increasingly global world. As a small country dependent on external trade and foreign investment, Singapore understands the value of such relations. We have forged deep links with our neighbours and the international business community. These partnerships have helped establish Singapore as the main centre for trade, a vibrant exchange for services and intellectual capital, and a major financial centre.
Emerging economies that seize the opportunities globalization presents and adjust their sails to the winds of change will ride the wave towards growth, development and a better quality of life for their citizens.
The Private Sector
William Fall,
president, Bank of America International
Despite the progress in economic expansion made since the last IMF meeting, there has not been the level of consistent growth that many people expected. Governments must be encouraged to maintain the momentum by not raising interest rates prematurely and by coordinating interest rate adjustments without creating imbalances across the financial system.
Pressure must also continue on sustaining budgetary discipline. While there have not been any significant financial crises, the markets are having to digest some major issues: the impact of the oil jump during the summer, the forthcoming US election, the durability of US asset purchases by Asian investors, the gathering recovery in Japan and the enduring growth of China, with its immediate impact on regional performance.
The unsettling threat of terrorism is omnipresent, causing everyone to strengthen their crisis reaction and business continuity plans. Finally, the challenges of developing an adequate and consistent multi-jurisdictional regulatory framework must be faced. Without this, the effectiveness of the recent publication of the Basel II framework for defining an enhanced risk management approach cannot be maximized.
Cees Maas
vice-chairman and chief financial officer,
ING Group
The focus this year ought to be on appropriate fiscal policy, not only for emerging market economies, but for industrial countries as well. Within Central Europe, the new EU member countries are finding it increasingly difficult to combine the pressures on government finances imposed by Maastricht requirements with their political constituencies, as witnessed by three leadership changes in the region's main economies following EU accession last May. Fiscal issues are also key for Turkey, and conditions for a fiscal crisis in the Philippines are brewing.
Very often it is thought that balancing the government finances cannot go along with economic growth and poverty reduction, at least not in the short run. I fundamentally disagree with that. Recent IMF research even indicates the contrary: government debt, from a certain point on, reduces growth and thus increases poverty. So the challenge for emerging market governments seems to be to balance government finances while at the same time improving conditions for the poor within their term in office. In this respect, Brazil seems to be a good example so far, even though it still has a long way to go.
Roberto Setubal,
chairman,
Banco Itau
During this year's IMF/World Bank joint meetings, besides the already usual discussions on Argentina's crisis, Japan's growth or world economic recovery, we expect to see the focus of discussions being concentrated on China, oil prices, Brazil, the US and Basel II.
China is an important issue, not only connected to the recurring debate on soft versus hard landing and expectations on FX trends, but also to a long-term performance of the economy, and the degree of openness required to attract and keep even more investments from abroad. Oil prices could have an important effect on China's trade balance, bringing additional concerns over inflation. In fact, the recent oil price pattern could also have an important effect on threatening economies with the fear of inflation coupled with stagnation.
Brazil could be a hot topic, but viewed from a different angle this time. The key issues now would be associated with microeconomics and the necessary conditions for a sustainable growth. Political discussions tend to be of a lesser importance, especially taking into account reforms approved over the past months.
There should be strong debates over the fiscal and monetary policies in the US, and the real pace of recovery of its economy, which could affect liquidity available for investments on emerging markets.
Finally, discussions on the implementation of Basel II, its pillars and the impacts over the banking industry will certainly stay at the forefront of many debates, especially considering new standards of competition among institutions coming from asymmetries of the new regulation.
The Policy-makers
Alan Larson, Under-Secretary for economic, business, agriculture affairs, US State Department
One of the things I hope will be discussed significantly is the role that investment plays in promoting economic growth and in achieving poverty reduction. The private savings of developing countries constitute a vast potential financing towards development. Finding ways to make sure those savings are used effectively, and the citizens of these countries can put their money to work in their countries, and not have to send it outside in order for it to be safe are important priorities. The Paul Martin and Ernesto Zedillo report that was prepared for UN Secretary-General Annan highlighted that there is arguably $9 trillion of assets owned by the citizens of developing countries. So if this were put to more productive use, it would be an important force for development.
Therefore, we ought to be looking at how we can ensure more investment in developing countries by the citizens of developing countries as well as considering what should be done to make developing countries a more attractive destination for investment from firms in developed countries. These are very important contributors to development - more important quantitatively than official development assistance. And because the private sector - individuals and firms that have ownership of these assets - is guiding them, they will make sure there are good returns on investment, whether it's public investment or private investment.
Nor Mohamed Yakcop
finance minister II,
Malaysia
As with previous Annual Meetings, everybody looks forward to the World Economic Outlook (WEO). While indicators point to encouraging world economic growth with possible upward revisions for this year, there remain a number of downside risks and vulnerabilities to the global economy. Among these are oil prices and oil supply that generate speculative pressures. Therefore, there is a need for greater cooperation between consumers and producers towards a more stable global oil market. Inflationary pressures could be stronger with the increase in oil prices. Another challenge will be to contain inflationary pressures without excessive tightening of monetary policy. In addition, addressing key medium-term vulnerabilities and concerns will also be important issues for discussion, namely, the need to address global imbalances; the pace of structural reforms should be quickened to increase economic flexibility and resilience; and medium-term fiscal positions should be strengthened in both industrial and developing countries.
Mohammad Abu-Hammour
finance minister,
Jordan
I think that the main themes at this year's IMF/World Bank meetings would include developments regarding the global economy, debt problems of developing countries and the fight against poverty. I would like the meetings to concentrate on issues such as foreign direct investment in developing countries, increasing the financing opportunities to small- and medium-sized enterprises, studying the disparities within
countries and between countries, and introducing suggested solutions.
The NGOs
Peter Eigen, chairman, Transparency International
A new consensus has emerged that good governance and a clamp down on corruption are essential to sustainable development. In December 2003, more than 100 governments signed the UN Convention against Corruption. In June 2004, UN Secretary-General Kofi Annan declared an anti-corruption pillar as the tenth principle of the UN Global Compact, signed by leading businesses.
This year's Annual Meeting should build on the commitment made to tackle the “cancer of corruption” by President James Wolfensohn by pursuing ways to maximize the “governance dividend”.
The Bank should now wholeheartedly embrace Transparency International's Integrity Pact, where bidders on a tender provide a binding assurance that they have not paid, and will not pay, any bribes to secure the contract.
Furthermore, the Bank should insist that all companies that bid to work on Bank-funded projects adopt the Business Principles for Countering Bribery, formulated with leading multinationals by Transparency International and Social Accountability International. The Bank should also pressure governments to ratify and implement the UN Convention.
The African Union has estimated that corruption costs African economies in excess of $148 billion each year. This amounts to one-quarter of Africa's GDP. On the Bank's own figures, bribery costs $1 trillion annually. There is no excuse any more: corruption thwarts economic and social development; corruption costs lives.
Zac Goldsmith, editor, The Ecologist
In recent years, the world's climate experts, some of the largest insurance firms, leading politicians and government scientists have reached consensus on the colossal threat posed by climate change. Unfortunately, the World Bank and IMF, among the world's most influential bodies, appear to be taking little notice.
Since the Climate Convention was signed in 1992, the World Bank has invested about 20 times more money in oil, gas, coal and fossil-fuel power projects around the world than it has in renewable energy, a disparity that according to recent figures is set to widen. In fact, the picture is worse than it first appears, because within the renewable energy figures, the Bank includes support for large hydroelectric projects that are widely criticized for their high cost and social and environmental impact.
The Bank maintains that these projects stimulate much-needed economic growth, but given that the Operations Evaluations Department itself has found that there has been a negative relationship between extractive industry dependence and economic growth for all borrower countries, it's a policy commitment that's hard to justify.
If the Bank is to be seen as part of the solution and not the problem, it has no option but to redress this imbalance. Real renewable energy projects need to move up the
ladder. Fossil-fuel projects need to move down.
Brent Blackwelder
president, Friends of the Earth, US
The World Bank – and especially its private-sector arm, the
IFC – have an opportunity this coming year to look in the mirror and decide what kind of social and environmental policies the Bank truly desires to have, and to what degree it will fulfil its mission of sustainable development in developing countries. Indeed, these questions will be foremost as the IFC undertakes a revision of its social and environmental safeguard policies. So far, however, the signs are not good that the outcome of that revision process will be beneficial for people and the environment.
The review of the IFC social and environmental safeguards comes just on the heels of the Extractive Industries Review, an outside review process of the Bank's financing for oil, gas and mining projects that was commissioned by the Bank itself and led by former Indonesian environment minister Emil Salim.
The final report from the Review urged serious reforms – that the World Bank establish a human rights policy, recognize sensitive habitat like tropical forests as “no go zones” for fossil fuel drilling and mining, and obtain the prior, informed consent of indigenous communities before supporting projects on their lands. The Review's report also made clear that there is no evidence that extractive industry projects have
contributed to poverty alleviation.