The 2007 Global Monitoring Report on the Millennium Development Goals (MDGs) assesses the contributions of developing countries, developed countries, and international financial institutions toward meeting universally agreed development commitments. Fourth in a series of annual reports leading up to 2015, this year's report reviews key developments of the past year, emerging priorities, and provides a detailed region-by-region picture of performance in the developing regions of the world, drawing on indicators for poverty, education, gender equality, health, and other goals. Subtitled "Confronting the Challenges of Gender Equality and Fragile States", this year's report highlights two key thematic areas-gender equality and empowerment of women (the third MDG) and the special problems of fragile states, where extreme poverty is increasingly concentrated. The report, which is jointly issued by the World Bank and the International Monetary Fund, argues that gender equality and the empowerment of women are central to the development agenda. This is because gender equality makes good economic sense and because it helps advance the other development goals-including education, nutrition, and reducing child mortality. Rapid progress has been made in some areas, such as achieving educational parity for girls in primary and secondary school in most countries. But in many other dimensions-including political representation and participation in nonagricultural employment-performance still falls short. Better monitoring and efforts at mainstreaming gender equality requires realistic goals, strong leadership, technical expertise, and financing.
This study provides information on official financing and the debt situation of developing countries. It discusses issues related to trade finance in financial crises, and the challenge of maintaining external debt sustainability in debtor countries. It updates the 2001 edition of Official Financing for Developing Countries.
This paper focuses mainly on official bilateral and multilateral financing for countries that have rescheduled their debts to official bilateral creditors. In contrast to the approaches taken by private lenders, official creditors have continued to provide new financing on a large scale to countries with debt-servicing difficulties that implement adjustment and reform programs. Financial support bas been provided through a wide variety of instruments and channels. For the low-income rescheduling countries as a group, total financial assistance has been about as large as these countries' own export earnings in every year since 1986. The recent trends in official financing have important ramifications for developing countries. Access to external financing from official sources is likely to remain high for those countries whose adjustment and reform efforts provide assurances that resources will be used efficiently. Conversely, countries with uneven records of policy implementation (particularly as regards payments arrears) are likely to find difficulty in attracting financial support.
Under the first Millennium Development Goal (MDG1), the international community aims to halve the global rate of extreme income poverty—as measured by the share of the population living on less than $1 per day—between 1990 and 2015. Current trends and growth forecasts indicate that this goal will be achieved, although not in Sub-Saharan Africa. High growth in China and India explains much of the reduction in the global poverty rate, although progress toward MDG1 has also quickened in many other developing countries. High growth has continued in most of the developing world in the past year as a result of better policies in developing countries and a favorable global environment. The outlook for growth and poverty reduction remains favorable, although some risks remain. In particular, low-income country per capita growth is expected to remain above 5 percent in 2007.1
Since 2000, over 34 million additional children in the developing world have gained the chance to attend, and complete, primary school—one of the most massive expansions of schooling access in history. Over 550 million children have been vaccinated against measles—doubling the coverage rates in some countries, and driving down measles deaths in Sub-Saharan Africa by 75 percent. The number of developing-country AIDS (acquired immunodeficiency syndrome) patients with access to antiretroviral treatment increased from 240,000 in 2001 to over 1.6 million at mid-2006. Despite migration and resource constraints, health workers and clinic visits across the developing world are increasing significantly, as are the share of pregnant women with access to health care when they deliver, and the share of young children with regular health and nutrition screening. There is now little question that the “stretch” goals adopted by the global community in 2000 to promote human development have helped stimulate and support more rapid expansion of basic health and education services across the developing world.
The 2006 World Development Report acknowledges the importance of ensuring equal opportunities across population groups as an intrinsic aspect of development and as an instrument for achieving poverty reduction and growth (World Bank 2005). Noting that men and women have starkly different access to assets and opportunities in many countries around the world, the report refers to gender inequality as the archetypal “inequality trap,” reproducing further inequalities with negative consequences for women’s well-being, their families, and their communities. MDG3 reflects the strong belief by the development community that redressing gender disparities and empowering women is an important development objective on grounds of both fairness and efficiency.1
Developed countries can help developing countries’ progress toward the MDGs by delivering on commitments of more (and more effective) assistance and by improving market access for these countries. The chapter assesses donors’ performance by monitoring recent trends in the overall volume, allocation, and delivery of aid; implementation of debt relief; and progress on global trade reform.
The environment in which the international financial institutions (IFIs)—the World Bank, the International Monetary Fund (IMF), and the regional development banks—operate today is different from that of just a few years ago. Globalization, a growing differentiation among developing countries, the availability of alternative financial resources, and the multiplication of actors on the development landscape—all these have forced IFIs to adapt their strategies for supporting developing countries’ efforts to meet the Millennium Development Goals (MDGs). Through closer collaboration with one another and with development partners, and through reform of their own governance, these institutions are seeking greater legitimacy and relevance in a world of overlapping and increasingly complex development mandates. This chapter examines the responsibilities of the IFIs within the Monterrey compact and their recent performance in carrying out those responsibilities.
After increasing more than threefold between 1990 and 1996, total net resource flows to developing countries have since halved, despite a brief recovery in 1999 (Figure 1.1).1, 2 Resource flows from private sources, comprising foreign direct investment (FDI), portfolio investment, bank lending, and international bond issuance by developing countries, dominated these developments. Private flows accounted for nearly 80 percent of the total net resource flows to these countries in 1996 and have remained around 60–70 percent since 1997. However, the overall dominance of private flows masked a vast difference in the composition of flows across income groups in developing countries. While private flows contributed the bulk of the resource flows to middle-income and transition economies, they accounted for less than 10 percent of net financing to low-income countries in the last two years. These countries, particularly the heavily indebted poor countries (HIPCs), have relied primarily on official development finance (ODF), absorbing about half of the net official development assistance (ODA) flows to developing countries (Figure 1.2).
Over 90 percent of world trade is conducted on the basis of cash or short-term credit, with the remainder supported by medium- and long-term credit and other means of financing. Trade financing therefore is an important component of external financing for developing countries. Export credits supported by official export credit agencies (ECAs) are a key element of nonconcessional financing from bilateral sources to developing countries and economies in transition (Box 2.1).7 The Berne Union of ECAs accounted for more than 16 percent of the total indebtedness of these countries and almost half of their indebtedness to official creditors in 2001.8