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WB reaffirms resolve to be pro-poor, RBI urges it to alleviate poverty

C K Arora in Washington

The World Bank has vowed to establish a clear link between debt relief and the goals of sustainable development and poverty reduction, providing an integral pro-poor growth focus to all its programmes.

The Development Committee, the bank's policy-making body, at its spring meeting, said the programmes should fully reflect social concerns by protecting social expenditures.

The meeting, attended by finance ministers from the 182 member-nations, in a communique adopted after a day-long discussion, said the Highly Indebted Poor Countries Initiative or HIPCI of the bank and the International Monetary Fund should be reformed to provide quicker, deeper and broader debt relief for the world's poorest countries.

Earlier during the discussion, the Reserve Bank of India governor Bimal Jalan had urged that the World Bank's emphasis should remain on its long-term development goals and poverty alleviation.

The Development Committee endorsed a set of principles regarding the upgrading of HIPCI, including recommendations that debt relief strengthen the tools the international community has to tackle poverty, improve incentives for debtor countries to implement economic and social reforms, and provide a clear exit from unsustainable debt.

It also emphasised the importance of early debt relief in the HIPCI.

The finance ministers endorsed a set of principles that should be used in considering changes to the current HIPC framework.

These guiding principles include recommendations that debt relief should:

• reinforce the wider tools of the international community to promote sustainable development and poverty reduction.
• strengthen the incentives for debtor countries to adopt and implement economic and social reform programmes.
• provide a clear exit from an unsustainable debt burden, taking into account the external vulnerabilities of each eligible country.

The ministers welcomed the proposals from bilateral creditors to consider enhanced debt relief, including more relief of the eligible HIPCs' Official Development Assistance debts.

The committee supported a better coordinated effort to ensure that new financing to HIPCs be in the form of grants or on highly concessional terms.

Ministers urged an intensification of efforts on both the aid and trade fronts, emphasising that HIPC initiative debt relief alone would be insufficient to reach the overarching international development goal of halving the proportion of people living in absolute poverty by 2015.

They encouraged the two institutions (the World Bank and the IMF) to continue to work together and with UN agencies, bilateral partners, and other institutions, to strengthen their assistance to post-conflict countries and to implement enhanced assistance in individual countries as soon as possible, in the context of appropriate macro-economic and structural policies.

The committee welcomed the successful conclusion of the 12th replenishment of the International Development Association, the bank's concessionaire lending agency. India is one of the biggest beneficiary of the facility, drawing an interest loan of about $ 1 billion a year.

The committee welcomed the holistic approach to sustainable development envisaged in the Comprehensive Development Framework which emphasises the ultimate importance of country ownership of decision-making as well as partnership and coordination between government, civil society, the private sector and other multilateral and bilateral actors in pursuit of poverty reduction - the bank's central goal.

UNI

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