Report on Operations Under the Bretton Woods and Related Aggrements Act
The overarching mission of the World Bank Group is to reduce global poverty, focusing on the achievement of the Millennium Development Goals (MDGs). The MDGs set concrete targets for the elimination of poverty and sustainable development and provide the World Bank Group and other donors with common targets and yardsticks for measuring results. The World Bank Group concentrates on fostering a climate conducive to investment, job creation and sustainable growth. It also seeks to empower the less fortunate, through the provision of health services, education and other social services, to enable them to participate in development.
The World Bank Group is made up of five complementary but distinct entities: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a unique role in promoting global poverty reduction.
All figures and activities in this overview section are for the World Bank Group’s 2010 fiscal year (July 1, 2009 to June 30, 2010).
Together, the IBRD and IDA are often referred to as “the World Bank.” They focus on lending and contributing to development projects that help to reduce poverty. Funding from the IBRD and IDA go to sectors such as education, health, infrastructure, the environment and agriculture. The IFC and MIGA support private sector investments in developing countries.
IBRD—International Bank for Reconstruction and Development
Established in 1944, the IBRD is the original institution of the World Bank Group and continues to be its main lending agency, providing loans to middle-income and creditworthy low-income countries.
The IBRD raises most of its funds in the world’s financial markets by selling AAA-rated World Bank bonds. It lends these funds to its client countries at a rate of interest that is much lower than the rate they could secure on their own. The IBRD can borrow at attractive rates because it is backed by capital commitments from its member countries.
The IBRD does not seek to maximize profit; rather, it aims to earn enough to ensure its financial strength and to sustain its development activities. In 2010, the IBRD committed US$44.2 billion to 164 projects in 46 countries.
Latin America and the Caribbean received the largest portion of IBRD funding in 2010 (31 per cent), followed by Europe and Central Asia (23 per cent).
IDA—International Development Association
In the 1950s, it became clear that the poorest developing countries could not afford to borrow needed capital on the interest terms offered by the IBRD. In response, IDA was set up to reduce poverty by providing interest-free credits and grants. IDA lending now accounts for approximately one-third of World Bank Group financing and is focused on countries with annual per capita income of less than US$1,165. IDA offers 20-, 35- and 40-year interest-free loans and grants to countries at risk of debt distress and represents the largest source of development financing for these countries. Seventy-nine countries were eligible for IDA financing in 2010. Countries that are eligible for IDA lending and also have an active IBRD lending program are charged interest for loans from IDA.
New IDA commitments are financed through contributions from donor governments, annual transfers from IBRD net income, transfers from IFC net income, and IDA’s own internal resources (i.e. principal repayment on past loans). Donor contributions make up the largest component of IDA’s finances. Every three years, IDA funds are replenished through new donor pledges.
Africa received the largest share of IDA resources in 2010—US$7.2 billion, or 49 per cent of total commitments. South Asia received 32 per cent of new commitments, totalling US$4.6 billion.
IBRD and IDA lending for infrastructure (transportation; energy and mining; and water, sanitation, and flood protection) combined for approximately 39 per cent of total lending in 2010. Other sectors that were a major focus for lending included public administration, law and justice; finance; and health and other social services.
IFC—International Finance Corporation
The IFC works with the private sector in developing countries to reduce poverty and encourage sustainable economic growth. It provides financing for private sector projects, assists in mobilizing financing in international financial markets, and provides advice and technical assistance to businesses and governments. The IFC only provides financing where sufficient private capital cannot be obtained from other sources on reasonable terms. The IFC is now the largest multilateral source of loan and equity financing for private sector projects in the developing world.
The IFC is legally and financially autonomous, but it collaborates and coordinates with the IBRD, IDA, MIGA and other organizations.
In 2010, the IFC committed US$12.7 billion in new investments. The IFC’s total portfolio grew to US$38.9 billion from US$34.5 billion the previous year. New commitments were US$3.0 billion in Latin America and the Caribbean, US$3.0 billion in Europe and Central Asia, US$2.4 billion in Sub-Saharan Africa, US$1.6 billion in the Middle East and North Africa, US$1.5 billion in East Asia and the Pacific, and US$1.1 billion in South Asia.
In an effort to mobilize capital from outside the IFC’s traditional investor pool, in January 2009, the IFC established the Asset Management Company (AMC) to serve as a fund manager of third-party capital. As of September 30, 2010, AMC has assets under management of $4 billion in the IFC Capitalization (Equity) Fund, IFC Capitalization (Subordinated Debt) Fund, IFC Africa, Latin America and Caribbean Fund, and Africa Capitalization Fund.
MIGA—Multilateral Investment Guarantee Agency
MIGA encourages foreign investment in developing countries by providing guarantees to foreign investors against loss caused by non-commercial risks. MIGA also provides technical support to help developing countries promote investment opportunities and uses its legal services to reduce possible barriers to investment.
In 2010, the total amount of guarantees issued for projects in MIGA’s developing member countries was US$1.5 billion. This is up from 2009 levels due to a return to a more diversified portfolio.
ICSID—International Centre for Settlement of Investment Disputes
ICSID provides conciliation and arbitration mechanisms for investment disputes between member countries and private investors. Canada is not currently a member of ICSID. However, in 2008, legislation to implement the Convention of the Settlement of Investment Disputes between States and Nationals of Other States received Royal Assent. The new legislation will come into force on a day to be fixed by Order of the Governor in Council, enabling Canada to move towards ICSID membership. ICSID membership would provide Canadian investors with an additional mechanism for the resolution of investment disputes pursued under international arbitration.
The World Bank Group has in place several bodies to ensure that its activities are achieving results, are carried out with integrity, and are working for the benefit of the vulnerable and disadvantaged in developing countries.
The Independent Evaluation Group (IEG)
The IEG is an independent unit within the World Bank Group reporting directly to the Bank’s Executive Board. The IEG assesses the development impact of IBRD, IDA, IFC and MIGA programs, aiming to provide an objective assessment of their work, create accountability in the achievement of the Bank’s objectives and ensure that the Bank learns from its experiences. Its reports are available online at http://www.worldbank.org/ieg.
Compliance Advisor Ombudsman (CAO)
The Office of the CAO is committed to enhancing the development impact and sustainability of IFC and MIGA projects by responding quickly and effectively to complaints from affected communities. It also supports the IFC and MIGA in improving the social and environmental outcomes of their work and fostering a high level of accountability. The CAO’s annual report can be accessed
The Inspection Panel
The primary purpose of the Inspection Panel is to address the concerns of people who may be affected by IBRD and IDA projects and to ensure that the Bank adheres to its operational policies and procedures during the design, preparation and implementation phases of projects. The Panel is appointed by and reports directly to the Executive Board. The Panel’s website can be accessed at http://www.worldbank.org/inspectionpanel.
Department of Institutional Integrity (INT)
INT investigates allegations of fraud and corruption in Bank Group operations as well as allegations of staff misconduct, and reports its findings directly to the President. INT also assists in preventative efforts to protect Bank Group funds and ensure they are used for intended purposes. More information on INT can be found at http://go.worldbank.org/036LY1EJJ0.
Internal Auditing Department (IAD)
IAD’s work primarily focuses on determining whether the World Bank Group’s (WBG) risk management, control and governance processes provide reasonable assurance that: significant financial, managerial and operating information is accurate, reliable and timely; resources are acquired economically and used efficiently; assets are safeguarded; actions of the organization are in compliance with policies, procedures, contracts, and applicable laws and regulations; and significant programs, plans and business objectives will be achieved.
The WBG also initiated the process of hiring its first-ever WBG-wide Chief Risk Officer (CRO). The CRO will be responsible for: (i) assessing risks across the WBG including possible interactions among types of risk; (ii) benchmarking existing risk management practices against major financial institutions; (iii) ensuring consistency of WBG risk management activities with best practice; and (iv) considering unique risks that are specific to multilateral development banks and international financial institutions. The CRO will oversee the existing structure and be supported by a Group Risk Council, which will include key members from each of the WBG’s entities.
2010 was an important year for the World Bank. While the Bank responded to the financial crisis in
2008–2009 with increased lending and innovative financing and support mechanisms, five key priorities were identified following the crisis:
In order to make progress on these priorities, key actions were taken in 2010 to enhance the long-term legitimacy, credibility and effectiveness of the Bank.
First, steps were taken to ensure that the Bank has the resources needed to pursue its strategy. Shareholders helped ensure that the Bank was adequately capitalized going forward by agreeing to a general capital increase of US$86 billion for the IBRD, including a selective capital increase of US$27.8 billion, and a selective capital increase of US$200 million for the IFC. The general capital increase at the IBRD was the first general capital increase in more than 20 years and will allow the Bank to reach the projected level of lending of US$136 billion for the FY2009–2012 period, in response to the crisis, and then return to post-crisis annual lending of US$15 billion. To increase resources available to low-income countries, an agreement was reached on the 16th replenishment of IDA in December 2010. Donors agreed to contribute US$49.3 billion to IDA, an 18‑per-cent increase from the last replenishment three years earlier. Over the next three years, IDA will help 79 of the world’s poorest countries boost growth and overcome poverty by financing infrastructure, improving health services, educating children and combating climate change. There will be a special focus on addressing gender issues and helping fragile and conflict-affected countries. As in the past, Sub-Saharan Africa will remain a major focus of IDA support.
In addition, shareholders increased the representation of developing countries in the governance of the Bank. Following efforts in 2009, a second phase of voice reforms was agreed that resulted in an additional increase of 3.13 per cent in voting power for developing and middle-income countries, bringing their total IBRD voting power to 47.19 per cent. Voice reform brought their voting power at the IFC to 39.48 per cent, an increase of 6.07 per cent. Regular IBRD and IFC shareholding reviews will take place every five years as the Bank moves toward equitable voting power between developed and developing countries over time. At the Board of Directors, an additional chair was added that will give further representation to African countries.
Finally, the Bank agreed to a series of significant reforms to improve effectiveness, transparency and accountability. These include:
The World Bank Group is governed by 187 member countries. Each owns shares of World Bank stock and thus holds decision-making power. Decision-making power and influence at the World Bank Group is primarily exercised by countries through their Governor and Executive Director, negotiations of additional capital increases and contributions to multi-donor trust funds.
Canada is the seventh largest shareholder at the Bank, having contributed a total of US$5.5 billion in capital subscriptions to the IBRD, IFC and MIGA and US$8.7 billion in donor contributions to IDA. Our voting power ranges from 2.51 per cent to 3.38 per cent within the Bank’s different institutions.
|(US$ millions, unless otherwise indicated)|
|Amount paid in||334.9||8,935.891||81.3||10.7|
|Subscription share (%)||2.84||4.49||3.43||2.96|
|Voting power (%)||2.78||2.53||3.38||2.51|
|Note: Figures are from the 2010 financial statements and annual reports for the World Bank, IFC and MIGA.
1 Represents Canada’s cumulative contributions.
Each World Bank member appoints a Governor to represent it on the Board of Governors, the highest authority governing the Bank. Canada’s Governor is the Minister of Finance.
The Governors are responsible for core institutional decisions, such as admitting or suspending members, increasing or decreasing the Bank’s authorized capital stock, determining the distribution of net income, and reviewing financial statements and budgets.
The Board of Governors is asked to vote on a number of resolutions throughout the year. Canada’s positions on resolutions taken in 2010 are shown below.
Governors delegate responsibility for the day-to-day running of the organization to 25 full-time Executive Directors, located at the Bank’s headquarters in Washington, DC. Executive Directors are appointed for two years. They each represent a constituency, which can include more than one country. Canada’s Executive Director, Ms. Marie‑Lucie Morin, represents a constituency that includes Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. Governments within the constituency provide advice to the Executive Director on issues discussed at the Executive Board. The Executive Director considers this advice in forming her positions and applies her own judgment as an officer of the World Bank.
The Executive Board usually makes decisions by consensus. In the event of a formal vote, however, the relative voting power of individual Executive Directors is based on the shares held by the constituencies they represent.
Voting power at the Bank is mainly a function of the shareholdings held by a country, which in effect means that voting power reflects the relative economic strength of individual members. A small share of a member’s voting power is also determined by basic votes, which are distributed equally among all members.
|Country||% of Total
|1 China has slightly more votes than Canada, Italy, India, Russia and Saudi Arabia.|
Shareholders typically raise questions or concerns about specific Bank operations before they get to the Executive Board. As a result, decisions at the Board are generally taken by consensus. Executive Directors may, however, abstain or vote against projects or policies in consultation with their constituencies. In 2010, the Executive Director representing Canada supported all policies and projects approved by the Board, with four exceptions.
(Only oppositions or abstentions listed)
Canada’s Executive Director at the World Bank Group and members of her staff meet with a variety of stakeholders, including governmental and civil society organizations and those pursuing business opportunities at the respective institutions.
In 2010, staff from Canada’s Executive Director’s Office met with representatives from Canadian and international civil society, including the North-South Institute, Canadian Co-operative Association, Unversité de Sherbrooke and McGill University.
|Executive Director||Marie-Lucie Morin (Canada)|
|Alternate Executive Director||Kelvin Dalrymple (Barbados)|
|Senior Advisor||Donal Cahalane (Ireland)|
|Senior Advisor||Jonathan Rothschild (Canada)|
|Senior Advisor||Robert Chiew (Canada)|
|Senior Advisor||Anita Ambroise (Canada)|
|Advisor||Sharon Crooks (Jamaica)|
|Advisor||Anne Donegan (Ireland)|
|Executive Assistant||Gerda Merwald|
|Address||MC-12-175, 1818 H Street N.W., Washington, DC 20433, USA|
Canada is an important provider of donor funding for the World Bank Group. In 2010, Canada made the following contributions:
IDA Payment Encashment: $384,280,000
IDA is the World Bank’s principal financing tool for the world’s poorest countries, providing them with interest-free loans and grants. IDA allocates its resources primarily through a performance-based allocation mechanism, which includes measures of a country’s social inclusion (e.g. social protection, gender equality) and governance. The higher countries rate on these indicators, the more IDA resources they can receive.
The Department of Finance provided $384 million to IDA in 2010. This contribution supports IDA’s efforts to enhance aid effectiveness, finance large regional projects such as infrastructure projects, and provide special assistance for fragile states such as Afghanistan and Haiti, while ensuring countries do not take on unsustainable levels of debt.
Multilateral Debt Relief Through the World Bank: $51,200,000
Under the Multilateral Debt Relief Initiative (MDRI), the World Bank, IMF and African Development Fund have agreed to cancel 100 per cent of eligible debts owed by heavily indebted poor countries. At the G‑8 Summit in Gleneagles in 2005, Canada and other donor countries agreed to fully compensate these institutions for the debts they will cancel on behalf of poor countries, so as not to undermine their ability to provide new financial support to all low-income countries. Canada’s total commitment over the 50-year lifespan of the MDRI is $2.5 billion and payments are made annually.
In 2010 Canada provided $51.2 million to the World Bank Group for the MDRI. Authorities under the MDRI also enabled the Government of Canada to respond quickly to the needs of Haiti by leading a G‑20 consensus to forgive over US$825 million Haiti owed to international institutions. Canada was the first country to make all of the payments required to cancel Haiti’s debt.
World Bank Group Trust Funds
Canada contributes to a number of World Bank–administered Multi-Donor Trust Funds. Trust funds are managed at the World Bank Group and are set up to mobilize donor resources to address key strategic development priorities at the country level.
The disbursements listed below are through the Canadian International Development Agency (CIDA), unless otherwise indicated.
|Disbursement||April 1, 2009 to March 31, 2010||April 1, 2010 to December 31, 2010|
|(millions of dollars)|
|West Bank and Gaza—World Bank trust fund||15||–|
|Tanzania—Poverty Reduction Support Credit||17.2||–|
|Caribbean regional—Partnership Private
|Pakistan—Education Development Program||5.8||6.8|
|Haiti—Multi-Donor Reconstruction Trust Fund||–||31.3|
|Education for All – Fast Track Initiative
(Catalytic Fund and Secretariat)
|Pilot Program for Climate Resilience||15||–|
|Global Agriculture and Food Security Program
(Public Sector Window)
|Global Agriculture and Food Security Program
(Private Sector Window)1
|Global Trade Liquidity Program2||216||–|
|Global Food Response Program||30||–|
|1 $48 million was through the Department of Finance while $2 million was through CIDA for technical assistance.
2 Funding was through the Department of Finance.
Sources: CIDA and the Department of Finance.
The World Bank administers a number of global initiatives, such as the Global Fund to Fight AIDS, Tuberculosis and Malaria and the Global Environment Facility. The following table lists Canada’s contributions to these initiatives.
|Initiative||1999–2000 to 2007–081||2008–091||2009–101|| April 1–
December 31, 2010
|Total Since 1999–2000|
|(millions of dollars)|
|Consultative Group on International
|Vaccine Advance Market Commitment||115||–||–||20.3||135.3|
|Global Fund to Fight AIDS, Tuberculosis
|Global Alliance for Vaccines
|Global Environment Facility||401.6||49||41.9||38.1||530.6|
|1 April 1 to March 31.
2 Includes $32.5 million over three fiscal years (2009–10 to 2011–12). Sources: CIDA and the Department of Finance.
The Government of Canada is committed to promoting good governance and accountability both at home and in its relations with the international community. One of Canada’s main objectives at the Bretton Woods Institutions (BWIs) is to ensure that they are well governed and accountable to their members. It is critical that the BWIs’ governance structures represent their members and that their operations reflect the priorities agreed to by those members. Further, the BWIs must be financially sustainable and transparent. These elements are central to maintaining the relevance and legitimacy of these institutions in an evolving global context.
A key challenge for the BWIs over the last few years has been to adopt a more representative governance structure in order to reflect a changing global economy. The ongoing voice reforms at both the IMF and World Bank are important in enhancing the legitimacy of these institutions.
2010 Action: Work towards a final agreement on World Bank voice reforms in 2010 for both the smallest and poorest countries, and building in incentives for donors, including emerging market and developing country donors, to support IDA.
Significant progress was made in 2010 towards negotiating Phase II voice reforms, furthering the reforms made in 2008.
The World Bank’s Development Committee, on which Canada plays an important role, endorsed a voice reform package in April 2010 that strengthens the voting power of developing and transition countries at the International Bank for Reconstruction and Development. Once this reform package has been implemented, these countries will hold 47.19 per cent of voting power at the IBRD, representing a total shift of 4.59 percentage points since 2008. This realignment is the result of a selective capital increase of US$27.8 billion, of which US$1.6 billion is paid-in. Under this voice reform package, Canada’s shareholding at the IBRD will decrease from 2.78 per cent prior to the 2008 voice reform package to 2.43 per cent once the current Phase II voice reforms have been fully implemented.
An increase in the voting power of developing and transition countries will also occur at the World Bank Group’s private sector arm, the IFC. Under this realignment, the voting power of developing and transition countries increases to 39.48 per cent, representing a total shift of 6.07 percentage points. The 2010 IFC realignment will result from a selective capital increase of US$200 million and an increase in basic votes for all members.
The Canadian Executive Director at the World Bank chaired the Committee on Governance and Executive Directors’ Administrative Matters, which leads the voice reform process within the Bank. Through this mechanism, Canada has played a lead role in forging consensus and advancing discussions that were key to the Development Committee reaching an agreement in April 2010.
Formal ratification of voice reform packages at the IBRD and IFC by Governors of the World Bank is expected in 2011. The next shareholding review is scheduled for 2015. Canada will continue to advocate for voice reforms and a dynamic shareholding formula that is representative of the world economy.
2010–2012 Action: Press for a World Bank Group corporate strategy that incorporates benchmarks to track progress and review performance on its reform agenda. Push for a focal point under the President responsible for bringing together all operational and budgetary aspects of the reform agenda and ensuring a sound and sustainable business model.
As host of the G-20 Leaders Summit in Toronto in June 2010, Canada pressed to ensure that the requested general capital increase at the World Bank Group was closely linked to ongoing and important institutional reforms that would make the institution more effective, efficient and accountable.
This series of reforms include a number of specific actions geared to achieve greater transparency, stronger accountability, improved institutional governance, deeper country ownership, more decentralization and use of country systems where appropriate, and enhanced procurement guidelines. Strengthened governance and anti-corruption efforts will provide more resources to prevent and fight corruption. A focus on investment lending reform will improve results, increase speed and delivery, and strengthen risk management.
Through these reforms the World Bank Group will implement new ways of managing and tracking results and financial contributions, strengthen knowledge management, better implement environmental and social safeguards, employ sound risk management, ensure financial sustainability with pricing linked to expenses, and commit to reducing administrative expenses. The World Bank Group is putting in place a focal point responsible for bringing together all operational aspects of the reform agenda.
Efforts undertaken in 2010 build on Canada’s previous reform efforts at the Bretton Woods Institutions and address Canada’s priority to push the IMF and World Bank to increase their legitimacy, credibility and accountability. Canada has also been consistent in encouraging both the World Bank Group and the IMF to staff leadership positions through open, transparent and merit-based selection processes, regardless of candidate nationality. We will continue to work with the World Bank towards implementation of these initiatives in 2011.
A second major Canadian objective is to ensure that the Bretton Woods Institutions (BWIs) are effective in carrying out their mandates. This means focusing services on BWIs’ core competencies, responding to member country demands, coordinating with other international partners, and exploring innovative ways to reach the BWIs’ goals.
A Canadian priority is to ensure that the IMF and the World Bank Group have adequate resources and appropriate instruments to fulfill their lending mandates and respond to crises, as per our G-20 commitment.
2010 Action: Complete the review of the Bank’s financial capacity, including capital needs, and seek early conclusion of the 16th replenishment of IDA.
Canada, in coordination with other World Bank shareholders, conducted a review of IBRD capital needs in 2010. The IBRD’s capital position was strong enough prior to the crisis to allow it to triple lending to developing countries over 2009–2011, but the Bank required additional financial capacity to meet lending demand post-2011. At its April 2010 meeting, the World Bank’s Development Committee endorsed a general capital increase (GCI) for the IBRD of US$58.4 billion, of which 6 per cent, or US$3.5 billion, would be paid-in capital. Governors also agreed to a Special Capital Increase to enable a vote distribution giving more voice to the poorest countries. As part of the GCI agreement, the Bank will unlock capital that was paid-in national currencies to generate additional capital and increase transfers to IDA as the IBRD’s equity-to-loans ratio strengthens.
This historic increase in the IBRD’s general capital is expected to be ratified by the Governors of the World Bank in 2011, after which time Canada will proceed with subscriptions of new equity. These subscriptions respond to Canada’s 2010 priority to ensure the IMF and World Bank Group have adequate resources and appropriate instruments to credibly fulfill their lending mandates. Subscriptions will be purchased over a five-year period.
During 2010, Canada also participated in the negotiations on the 16th replenishment of IDA (IDA16). These negotiations concluded in December 2010 and resulted in a total IDA16 envelope of US$49.3 billion, an 18‑per-cent increase over IDA15. IDA16 is representative of fairer and wider burden-sharing and draws on support from a broad coalition of donors, the World Bank Group, and former and current borrowers. During negotiations it was also agreed that IDA would formalize and respect an acceleration policy to increase capital available to the countries where IDA operates.
Getting the best development outcomes from our aid spending is a priority for Canada. To this end, the Government of Canada has set out an ambitious agenda to improve the cost effectiveness, focus and results of our aid programs, including our multilateral support.
2010 Action: Encourage the World Bank Group to increase the use of impact evaluations, as appropriate, to affect policy decisions.
Increased use of impact evaluations was a recurrent theme of IDA16. As a result of donors’ interventions, including Canada’s, IDA is planning to increase impact evaluations by 20 per cent and has included the number of impact evaluations as one of the variables in its performance report card.
2010–2012 Action: Push the World Bank Group to strengthen its capacity to manage and track development results
The overarching theme of IDA16 was delivering development results. Throughout the IDA16 negotiations donors, including Canada, pushed the World Bank to improve its tracking of development results. As a consequence, IDA modified its results management system to allow the evaluation of more indicators of IDA’s operational and organizational effectiveness against agreed IDA16 performance standards, to include new indicators, to report on sectoral outputs and outcomes, and to develop a matrix of monitorable actions for IDA16 (July 2011–June 2014).
Going forward, Canada would like to see IDA fully implement all of the commitments focused on results which were agreed to in IDA16. Progress on achieving these performance standards will be communicated in an IDA Report Card by the mid-term review of IDA16 (fall 2012). Canada would also like to see the World Bank Group extend the corporate scorecard model to all of its institutions.
IDA should increase its focus on results, including by:
Development Impact at the IFC and IBRD
Canada will continue to prioritize maximizing the development impact of the IFC and IBRD and has added specific long-term priorities to this end.
The IFC’s operations should maximize the development effectiveness of its operations by:
Aligning With Canada’s International Assistance Priorities
Canada has five priority themes for international assistance: stimulating sustainable economic growth, increasing food security, securing the future of children and youth, advancing democracy, and promoting security, stability and sustainability. The World Bank Group’s core mandate of poverty reduction and sustainable economic growth is very much in line with Canada’s priorities. Canada will continue to encourage the World Bank Group to engage further in work that is congruent with Canada’s priority themes. Canada will also encourage the World Bank Group to continue to invest in Canada’s priority countries of focus. The Canadian International Development Agency’s priority countries of focus and their status in IDA are listed in Annex 15.
Action 2010–2012: Press the World Bank to improve health system investments, which will be foundational for improvements in maternal and child health.
In the context of Canada’s G-8 Presidency, the World Bank was among the group of 8 health-related organizations (H8) that endorsed the 2010 G-8 Muskoka Initiative on Maternal, Newborn and Child Health. This initiative includes as one of its core principles for long-lasting results supporting country-led national health policies and plans that are also locally supported.
In May 2010, the World Bank Group released a Reproductive Health Action Plan, of which strengthening health systems is a key component. Canada welcomed this Action Plan at the Executive Board. In particular, Canada encouraged the Bank to stress with country authorities and other donor partners the importance of fully integrating reproductive health issues in efforts to strengthen health systems. The Canadian Executive Director’s statement on the Reproductive Health Action Plan: 2010–2015 is found in Annex 14.
Canada is a strong advocate at the Bank for innovative development initiatives that harness the strengths of the private sector. We believe this is particularly important as the Bank explores its role in providing global public goods. Many issues are beyond the scope of what governments can provide on their own due to financial and technical challenges. We cannot expect to succeed unless this challenge is also taken up by the private sector in the marketplace.
2010–2012 Action: Push for greater and more effective use of innovative tools to tackle global public goods
Through Canada’s leadership at the G-20 in 2010, progress was made on several initiatives to leverage private sector investments for development through the IFC. Each of these initiatives is in addition to Canada’s traditional support for multilateral development institutions and debt relief.
Canada will lead on the design and/or implementation of several facilities in 2011, including:
International Climate Change. Canada is helping developing countries to reduce their greenhouse gas emissions and adapt to climate change by delivering $291.5 million in concessional support for a broad portfolio of clean energy projects through the IFC. This combination of concessional private sector financing and technical capacity building is expected to catalyze significant clean energy investments in developing countries in the short term, while supporting their institutional capacity for environmentally sustainable development over the long term.
Private Sector Window of the Global Agriculture and Food Security Program. Achieving food security is a growing challenge in the developing world and critical to alleviating poverty. As part of the international effort to address the global food security crisis, Canada announced that it would increase funding for agricultural development by $600 million over three years. Of this amount, Canada is contributing $50 million to the Private Sector Window of the Global Agriculture and Food Security Program (part of a larger $230-million investment in this initiative), which is managed by the IFC. The Private Sector Window seeks to fill a significant gap in financing available to small and medium-sized agri-businesses and farmers in developing countries. By supplying different types of innovative financing, the Private Sector Window seeks to increase the commercial potential of these groups and incorporate them into the local, national and global agricultural distribution chain.
Innovative Financing for Agricultural Innovation (Pull Mechanisms). There is an urgency to accelerate research and development to close agricultural productivity gaps, amidst growing demand and mounting environmental stresses, particularly in Africa. The private sector will be critical in the development and deployment of innovative solutions that provide concrete results on the ground. In Toronto, G-20 Leaders committed to exploring the potential of innovative, results-based mechanisms such as Advance Market Commitments to harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agricultural development in poor countries. This commitment was subsequently reaffirmed at the G-20 Summit in Korea. Canada will support the World Bank in working with other partners to make progress in this area.
Small and Medium-Sized Enterprise (SME) Finance Challenge. Support for growth-oriented SMEs in developing countries is a significant contributor to poverty reduction through job creation. As host of the 2010 G-20 Leaders Summit in Toronto, Canada launched the SME Finance Challenge, an innovative, Web-based competition to find ways of supporting small and medium-sized businesses. A panel of international experts examined hundreds of proposals submitted from around the world and identified the 14 best proposals. Canada will provide $20 million as part of a global effort to implement and scale up the 14 proposals. Some funding will be delivered through the SME Finance Innovation Fund announced by the G-20, with the IFC acting as trustee.
Global Trade Liquidity Program: Supporting Trade in Developing Economies
The global financial crisis created a significant shortage in the supply of liquidity to finance trade, and developing economies were particularly vulnerable.
The Global Trade Liquidity Program (GTLP) was created by the IFC in 2009 to address this issue by raising funds from international financial and development institutions, governments and banks, and by working through global and regional banks to extend trade finance to importers and exporters. Through these arrangements, the award-winning facility is also contributing to the return of private sector trade financing in developing economies.
Canada was the first donor to participate in the GTLP. In 2010, Canada’s contribution was used to finance about 2,000 trade finance transactions, which supported an estimated US$630 million of trade flows in developing economies. Approximately 51 per cent of Canada’s contribution supported trade flows in the Latin America and Caribbean region and about 60 per cent of the transactions supported SMEs. Taking into account the amounts mobilized from private banks, Canada’s contribution supported more than US$1.7 billion in trade in 2010. The program has not experienced any portfolio defaults and Canada’s contribution is on track to being fully repaid by 2012.
Changes to MIGA
The World Bank Group is leading innovation in private sector participation through MIGA. In 2010, Governors of MIGA approved substantial changes to its convention. The agency now has broader scope to determine eligibility for investments that are in line with its requirements (projects supported through a MIGA guarantee must be financially and economically viable, environmentally sound, and consistent with the development objectives of the host country). These are the first changes to MIGA’s convention since the agency was established in 1988, and they will allow MIGA to insure more investments, thereby increasing its development impact.
Sustainable and balanced economic growth is critical for poverty reduction. Another main objective for Canada is to ensure that the poverty reduction, growth and macroeconomic stability that the IMF and World Bank foster have lasting results.
2010 Action: Ensure that Haiti’s outstanding debt to international financial institutions is completely forgiven
The Government of Canada responded quickly to the tragic earthquake that hit Haiti in January 2010. While Canada had already cancelled all bilateral debts owed to it by Haiti prior to the earthquake, following the tragedy, Canada led a G-20 consensus to forgive over US$825 million Haiti owed to international institutions. Canada was the first country to make all of its payments required to cancel Haiti’s debt, totalling US$32.6 million.
2010–2012 Action: Full Compliance With the Debt Sustainability Framework
Canada strongly supports basing lending decisions to low-income countries on their individual debt sustainability analysis and debt management capacities. The World Bank, IMF and regional development banks continue to use debt sustainability analyses when making decisions on financial support to poor countries.
Although Canada and the Bretton Woods Institutions comply with the Debt Sustainability Framework, unfortunately not all other creditors observe these guidelines, and some creditors continue to provide loans that may jeopardize the debt sustainability of recipient countries. Therefore, the inability to date of the Bretton Woods Institutions to get all bilateral creditors to lend on these principles of debt sustainability necessitates a “little progress” ranking for this action item.
To move forward on global standards for debt sustainability, Canada encourages the IMF and the World Bank to continue to work collaboratively with other organizations, such as the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD), to ensure that their responsible lending guidelines are consistent with the IMF and World Bank’s Debt Sustainability Framework.
2010–2012 Action: Debt Management Facility Effectiveness
The Debt Management Facility (DMF) aims to strengthen debt management capacity and institutions in lower‐income countries through a variety of activities, including:
The Debt Managers’ Network and the annual Stakeholders’ Forum.
The DMF had a productive first year. By July 2010, in collaboration with its implementing partners, it conducted 16 DeMPAs, 9 MTDS missions, 5 reform plan missions and 7 workshops, while remaining within the original budget forecast. As a result of these activities, 264 government officials have been trained under the DMF, either through workshops or during missions, of which 192 were from Africa.
Successfully reintegrating fragile and conflict-affected countries into the global economy represents another major challenge for the global community. The World Bank estimates that the 1 billion people living in fragile and conflict-affected countries includes 340 million of the world’s extreme poor; that fragile and conflict-affected countries account for almost two-fifths of all child deaths; and that half of all children who do not live to the age of 5 are born in these countries. Canada has therefore been advocating for stronger multilateral support for these countries to complement our own large bilateral aid programs in countries like Afghanistan and Haiti. We are encouraged by the Bank’s analysis and knowledge-sharing work related to fragile and conflict-affected countries, and we have collaborated with the Bank to provide financial and policy support for the upcoming 2011 World Development Report on conflict, security and development.
2010–2012 Action: Use the negotiations on the 16th replenishment of IDA (IDA16) to push for an increase in the length and volume of exceptional IDA allocations for fragile and conflict-affected countries, such as Haiti, while pressing for the implementation of reform to ensure that the World Bank offices in these countries have the right human resources and delegated authority
Supporting fragile and conflict-affected countries was one of the special themes discussed during the IDA16 negotiations. Canada was part of a small group of countries that led a consensus on improving the World Bank’s engagement in fragile and conflict-affected countries. As a result of this consensus, IDA introduced a case-by-case approach to extending exceptional allocations for these countries, which will result in an increase in allocations for those that require additional support.
The World Bank Group should improve its engagement in fragile and conflict-affected countries, including by:
Canada continues to encourage the World Bank to create an accountability framework with a strong and consistent monitoring and results framework across Bank initiatives to make transparent how gender is being integrated and tracked.
2010–2012 Action: Push the World Bank to include a monitoring framework, with clear and measurable targets for progress on gender mainstreaming, as part of its Gender Action Plan’s transition strategy
Tabled at the Executive Board in June 2010, the Gender Action Plan transition strategy (Applying Gender Action Plan Lessons: A Three-Year Road Map for Gender Mainstreaming—2011–2013) commits to strengthen the gender results framework and monitoring system, and features a results framework for gender mainstreaming at the World Bank Group.
Canada continues to play a role in the governance structure as the Gender Action Plan has moved to a Three-Year Road Map for Gender Mainstreaming. Along with like-minded donors, Canada requested that World Bank Group management further develop the gender mainstreaming targets in the results framework to make them time-bound. Canada wants to see accountability further strengthened by including assessments of gender mainstreaming in the performance evaluations of managers.
In the context of IDA16, gender equality has been identified as one of four cross-cutting themes. For the first time, there are specific indicators linked to the special themes (including gender) in the IDA Results Monitoring Framework, which will be aligned with those of the Three-Year Road Map for Gender Mainstreaming.
Canada is very pleased that the 2012 World Development Report is on gender equality and development, and is providing financial and analytical support to assist in the development of a cutting-edge report that moves the gender equality and development discourse forward.
The World Bank Group should accelerate progress on gender mainstreaming and gender-related Millennium Development Goals by:
Sustainable growth cannot be achieved without significant progress in addressing the world’s environmental challenges. In many developing countries, the costs of environmental degradation have been estimated at 4 to 8 per cent of gross domestic product annually. Natural resource degradation—depleted soils, insufficient water supply, rapidly disappearing forests and collapsed fisheries—threatens the health of millions of people. Pollution also continues to present a major health threat: an estimated 6 million people die annually, and many more get sick, in developing countries from water-related diseases, indoor air pollution, urban air pollution and exposure to toxic chemicals. The World Bank Group has a role in combating and coping with environmental threats and climate change.
Action 2009–2011: Ensure climate change considerations are integrated into the World Bank’s activities, notably those related to agriculture and new project decision making. Ensure appropriate linkages to climate change in the preparation of the World Bank’s Environment and Energy Strategies throughout 2010, and encourage the use of enhanced environmental indicators as part of IDA16.
This year the Bank has taken several steps to integrate climate change considerations into its activities. Most significantly, the 2010 World Development Report focused on development and climate change.
Although the Bank’s updated Energy and Environment strategies will not be released until 2011, the Bank actively sought input on both of these strategies throughout 2010. Canada has emphasized that both strategies will need to link to the Bank’s existing Strategic Framework on Climate Change.
As part of the Steering Committee of the Global Agriculture and Food Security Program, Canada was active in recommending that climate change and environmental considerations be incorporated into the overall program design.
Additionally, Canada and other shareholders were successful in encouraging the use of enhanced environmental indicators as part of IDA16. Specifically, these included ensuring that IDA’s climate change funding is tracked through internationally agreed markers such as the Rio Markers. As part of IDA16, IDA will also establish a coding system to measure the share of IDA investments and projects that provide climate adaptation and mitigation co-benefits.
We intend to continue to work with the Bank throughout 2011 to ensure that recent IDA16 commitments are fully implemented.
Action 2009–2011: Ensure that the Climate Investment Funds are achieving results, incorporating learning over time, and taking necessary steps to harmonize activities with any new climate funds that may emerge from international climate change negotiations.
The World Bank’s Climate Investment Funds (CIFs) are a collaborative effort among the multilateral development banks and countries to bridge the financing and learning gap between now and a post-2012 global climate change agreement. Canada has contributed $100 million to the Pilot Program for Climate Resilience (PPCR) within the CIF’s Strategic Climate Fund (SCF), which focuses on assisting developing countries to adapt to the effects of climate change.
Canada is represented on the Trust Fund Committees of both the PPCR and the SCF. Through these committees, we have helped to establish a working group on the harmonization of the CIF’s results measurement frameworks. Although there has been general agreement on this harmonized results framework, it is still too early to test the frameworks in the field.
In 2010, Canada made an important commitment to help developing countries address climate change. As part of this commitment, Canada has made pledges to several World Bank Group initiatives beyond the CIFs. These include providing $291.5 million in concessional support for a broad portfolio of clean energy projects through the IFC, as well as $40 million for the World Bank’s Forest Carbon Partnership Facility’s Readiness Fund, which supports the building of national capacity to address deforestation and forest degradation in developing countries. Going forward, it will be important to ensure that all of these targeted climate-related funds are aligned and achieve results over time.
Priority 3.5: Sustainability Standards
As Canada seeks to enhance its support for innovation for private sector participation in development through the World Bank Group, it will be important to ensure that these initiatives also contribute to environmental and social objectives. Going forward, Canada will seek to promote rigorous policies and performance standards on economic, social and environmental sustainability, primarily through the IFC’s Policy and Performance Standards on Social and Environmental Sustainability. In the medium term, we will encourage the World Bank to assist candidate and prospective candidate countries in completing the implementation process for the Extractive Industries Transparency Initiative, an initiative that Canada has championed.
|Priority 1.1 Voice Reforms: Enhance the legitimacy of the Bretton Woods Institutions through meaningful voice reforms.|
|The World Bank Group should move forward with further voice reforms by approving and instituting a dynamic formula for shareholder representation consisting of relevant economic variables.|
|Priority 1.2 Institutional Reforms: The World Bank Group should enhance its legitimacy, credibility and accountability through meaningful governance reforms.|
|The World Bank Group should have a corporate strategy that strengthens benchmarks to track progress and review performance on its reform agenda, including a focal point responsible for bringing together all operational aspects of the reform agenda.|
|Medium-Term 2011–2013||World Bank Group and IMF leadership positions should be staffed through open, transparent and merit-based selection processes, regardless of candidate nationality.|
|Priority 2.3 Resources and Lending Facilities: The World Bank Group should continue to have adequate resources and appropriate instruments to fulfill its mandate.|
|The financial sustainability of IDA should be evaluated and the current acceleration policy should be formalized and respected.|
|Priority 2.4 Aid Effectiveness: The World Bank Group should continue to use its resources to provide maximum development impact, manage and track results, and incorporate the results of evaluations and research into policy decisions.|
IDA should increase its focus on results, including by:
|The World Bank Group should implement a corporate scorecard for all of its institutions, including the new Results Management System of IDA.|
|Long-Term||The IFC’s operations should maximize the development effectiveness of its operations by:
|Long-Term||The IBRD should maximize its impact on development by continuing to transfer a robust portion of its net income to IDA based on a rules-based formula.|
|The World Bank Group should increase health system investments, which will be foundational for improvements in maternal and child health.|
|Long-Term||The World Bank Group should increase the amount of effective programming to facilitate agriculture, increase food security and improve nutrition.|
|Long-Term||The World Bank should continue to make significant contributions in Canada’s priority countries of focus.|
|Priority 2.5 Innovation for Private Sector Participation in Development: Continue to support new ways to promote private sector participation.|
|The Private Sector Window of the Global Agriculture and Food Security Program should be operational, delivering innovative financing for private sector agricultural development in poor countries.|
|The World Bank Group should work with Canada and other interested donors to explore results-based, innovative financing mechanisms, such as Advance Market Commitments, that harness private sector resources for agricultural innovation in poor countries.|
|The World Bank Group should have additional innovative private sector funding facilities for small and medium-sized businesses.|
|The World Bank Group’s climate funding should include facilities to enhance private sector participation in addressing climate change.|
|The World Bank Group should operationalize the amended convention to modernize MIGA’s mandate in order to expand the agency’s scope and allow it to increase the breadth of projects in developing countries.|
|Priority 3.1 Debt Sustainability: The World Bank Group should provide financial resources to developing countries in a manner that promotes development and does not jeopardize the sustainability of their debt or risk a debt default.|
|The IMF and World Bank should continue to work collaboratively with other organizations, such as the United Nations Conference on Trade and Development and the Organisation for Economic Co-operation and Development, to ensure that their responsible lending guidelines are consistent with the IMF and World Bank’s Debt Sustainability Framework.|
|The World Bank’s Debt Management Facility should have the necessary resources and accountability framework to continue to support debt management capacity building in poor countries over the medium term.|
|Priority 3.2 Fragile and Conflict-Affected Countries: The World Bank Group should have proper tools for assisting fragile and conflict-affected countries.|
|The World Bank Group should improve its engagement in fragile and conflict-affected countries, including by:
|Priority 3.3 Gender: The World Bank Group should mainstream gender considerations across operations.|
|The World Bank Group should accelerate progress on gender mainstreaming and gender‑related Millennium Development Goals by:
|Priority 3.4 Environment: The World Bank Group’s operations should make an enhanced contribution to environmental sustainability.|
|Climate change considerations should be integrated into all IDA activities, particularly by:
|The World Bank Group’s climate change trust funds should enable developing country partners to achieve results in mitigating and adapting to climate change.|
|Priority 3.5 Sustainability Standards: The World Bank Group should continue to have and promote rigorous policies and performance standards on economic, social and environmental sustainability.|
|The World Bank Group should approve and implement the revised Policy and Performance Standards on Social and Environmental Sustainability.|
|The World Bank Group should enhance its support for candidate and prospective candidate countries in completing the implementation process for the Extractive Industries Transparency Initiative.|