HIPC Initiative

The HIPC Initiative began over three years ago in the Development Committee, and it has continued to be a major focus of our attention. In April we encouraged the institutions to develop options designed to make the debt relief “broader, deeper, and faster,” and to establish a clear link between debt relief and poverty reduction. These goals served as the basis for the agreements reached two days ago at a joint meeting of the Interim and Development Committees, and yesterday at the Development Committee.

The HIPC Initiative was the ideal issue for this first-ever joint meeting of the two committees. The Executive Boards of both institutions have been deeply involved at every stage, and so it is appropriate that the far-reaching proposals for change were reviewed by the full membership of both Committees. The results were reflected in a joint statement issued by Chancellor Brown and myself after the meeting. We stated that “this joint meeting symbolizes the cooperation and high political commitment of all countries and institutions in this effort, and the new closer relationship between the Bank and Fund which will be crucial to achieving this goal.”

We believe the Committee has contributed to a major strengthening of Bank-Fund collaboration in support of poverty reduction—increased cooperation that is likely to have an impact far beyond the HIPC Initiative. The enhanced initiative entails, of course, additional costs for all participants. The Development Committee and the Joint Meeting have built the political support and momentum needed for success. Central to achieving this political support has been the reaffirmation of several key principles that have guided the initiative from the start, including the additionality of debt relief, the maintenance of the financial integrity of multilateral financial institutions, and the importance of fair and equitable burden sharing. The Committee has also considered the special problems of countries in conflict, and the assistance provided by the Bank and the Fund to assist post-conflict countries. We stressed the need to link such efforts to preparing countries for eligibility in the HIPC Initiative. In short, we are very pleased with the leadership role played by the two institutions and their leaders in making this ambitious venture possible, of course with the generous support of many partners represented in this hall today.

Strengthening the International System and Architecture

The Committee has addressed a number of important subjects that directly or indirectly form part of the international architecture. In the past year we have explored the following areas:

Developing countries and the international trade agenda. We were pleased to have as a plenary speaker yesterday the new Director-General of the World Trade Organization, Mr. Mike Moore. He set the tone for important and supportive comments in our communique, which emphasized that the next round of trade negotiations needed to deliver “early and substantial benefits for developing and transition countries, in particular the least developed countries.”

Principles and good practices in social policy. The Committee discussed this subject in the aftermath of the Asian crisis, stressing the importance of concerted action to help countries bolster their social policies and institutions. We concluded, however, that further development of basic principles in this area was best pursued with, and within, the framework of the United Nations, and leaving the Bank to concentrate on translating broad principles into practical country-specific results.

Strengthening international fora. The Committee discussed a number of options for strengthening the work of the Development Committee, including its links to the Interim Committee. Some of our members had advocated experimenting with a joint session of the two committees, and as a result of our experience two days ago we know that under certain circumstances it can work to good advantage. We are also seeking to ensure the minimum of overlap between the agendas of the two committees, so as to make the best use of members’ time.

World Bank issues

The Comprehensive Development Framework. During these two meetings the theme of the CDF has frequently arisen, as many ministers have stressed the valuable contribution the CDF can make to formulation of development programs. Its holistic approach, the central role played by the host government, and the emphasis on partnership have struck a strong and positive note among many Committee members. One aspect of partnership particularly emphasized by the Committee is the need to strengthen further the World Bank’s cooperation with regional development banks.

Bank capital adequacy. The President has worked closely with the Executive Board in reviewing carefully the status of the Bank’s financial capacity. Their conclusion, supported by the Development Committee, is that the Bank’s finances remain sound, but that there are clear limits on what it can do to respond to future demands, especially if there is a deterioration in the global financial environment. We will be keeping the subject under review, based on regular reports from the Bank.

Conclusion

In conclusion, over a year ago, when I became Chairman of the Development Committee, there was great concern that Bank-Fund cooperation was insufficient on many important issues. Now I am pleased to report that such is no longer the case, as the Bank and the Fund have cooperated closely on many common institutional challenges facing them in this past year.