Canada at the IMF and World Bank Group 2011 – Part 2 of 3

Report on Operations Under the Bretton Woods and Related Aggrements Act

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The World Bank Group 

Key Developments at the World Bank Group in 2011

Addressing Complex Development Challenges

During the course of 2011, the World Bank Group was at the front lines to tackle the historic changes that took place in the context of the Arab Awakening, particularly through the Deauville Partnership to support the changes underway in some countries in the Middle East and North Africa. The World Bank has an important presence in this region, with the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) lending more than US$2 billion in their 2011 fiscal year to the region. Its long-term strategy in the region will focus on strengthening its governance framework (transparency, accountability and social justice), fostering inclusive growth, establishing sustainable social protection, helping reduce food price volatility and supporting global and regional economic integration.

Underlining the Bank’s commitment to be active in complex development challenges, two timely World Development Reports were published in 2011:

• World Development Report on conflict, security and development. In April 2011, the Bank released its first ever World Development Report on the topic of conflict, security and development. The report notes that the risk of major violence is greatest when high levels of societal stress combine with weak and illegitimate national institutions, and that conflict-affected states severely compromise the development prospects not only of their own citizens but of their entire region. The report draws lessons on how to escape from cycles of violence, including placing a greater focus on preventative action and building up long-term resilient state institutions.
  In addition, the Bank introduced two mechanisms to improve its ability to respond to crisis situations in the poorest countries. The IDA16 replenishment allocated 5 per cent of IDA resources for a new Crisis Response Window to enable additional resources to be quickly mobilized for large-scale crises. Some $250 million from the Crisis Response Window has already been used to supplement the Bank’s response to the devastating drought in the Horn of Africa. In addition, in December 2011 the Executive Board approved the Immediate Response Mechanism to allow the Bank to rapidly reallocate existing resources to address a crisis. Also as part of operationalizing the World Development Report, the Bank opened a centre of excellence on conflict, security and development in Nairobi, Kenya.
• World Development Report on gender equality and development. In September 2011, the Bank released its World Development Report on gender equality and development with the clear message that equality between women and men is smart economics and an essential ingredient in poverty reduction. The report points out that while much progress has been made on gender equality issues over the past 20 years, much remains to be done and specific actions will be required by governments, the private sector and development partners. For its part, the World Bank Group produced a paper entitled “Implications of World Development Report 2012: Gender Equality and Development for the World Bank Group” and will report back on the implementation of strategies identified in the paper next year.

Investing Needed Resources

While global economic uncertainties remained a key concern in 2011, the World Bank Group maintained a strong role to help developing countries address risks and to help secure long-term growth. In the World Bank Group’s 2011 fiscal year, a total of $57.3 billion in loans, grants, equity investments and guarantees was committed by the Bank to promote poverty reduction and economic growth in developing countries. This includes:

• The IBRD made new commitments totalling US$26.7 billion, providing needed resources to 132 projects in 43 countries to reduce poverty.
• IDA commitments totalled US$16.3 billion, of which the largest share, US$7.0 billion or 43 per cent, was committed to Africa.
• The International Finance Corporation (IFC) provided US$12.2 billion in new investment commitments, as it works with the private sector to encourage sustainable economic growth in developing countries.
• The Multilateral Investment Guarantee Agency (MIGA) issued US$2.1 billion in risk guarantees, an increase from US$1.5 billion in 2010.

Delivering on Reforms and Modernization

In 2011, the Bank continued to make progress on institutional reforms in the area of transparency and accountability. The success of its Open Data, Knowledge and Solutions initiative was recently recognized by the Publish What You Fund organization, which ranked the World Bank No. 1 among 30 international aid agencies in transparency. In terms of accountability, the presence of a third Executive Director for Sub‑Saharan Africa in 2011 gave the region additional voice in weekly discussions at the Executive Board. Additionally, the first ever Corporate Scorecard, which provides a series of linked high-level indicators that track the Bank’s operational and development results, was released at the Annual Meetings. The Scorecard, which will be published annually, will serve as a useful tool by highlighting areas where the Bank is performing well and those where further improvements are needed.

Canada’s Priorities at the World Bank Group

Assessment of Progress Made on Canada’s Priorities at the World Bank Group in 2011

Colour code:

      Good progress

      Some progress

      Little progress

1) Governance and Accountability

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.

Priority 1.1: Voice Reforms

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.

2014–2016 Action: 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.

      Good progress

In 2011, World Bank Governors ratified Phase 2 of the IBRD’s voice reform package. Once these voice reforms are implemented, developing and transition countries will hold 47.19 per cent of voting power at the IBRD, an increase 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. Canada’s shareholding at the IBRD will decrease from 2.78 per cent prior to the first voice reform package in 2008 to 2.43 per cent.

Canada also voted in favour of ratification of the voice reform package at the IFC. Under this realignment, the voting power of developing and transition countries will increase by 6.07 percentage points to 39.48 per cent. The realignment will result from a selective capital increase of US$200 million and an increase in basic votes for all members. As of December 31, 2011, the IFC has received approval from 151 members representing 72.5 per cent of voting power. Since the resolution adoption requirements call for approval from members representing 85 per cent of the total voting power, the resolution has not yet passed.

The World Bank Group’s next shareholding review is scheduled for 2015.

Priority 1.2: Institutional Reforms

2011 Action: 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 agenda.

      Good progress

As part of the recapitalization program agreed at the Spring Meetings in April 2010, member countries, including Canada, required the World Bank to implement important institutional reforms that would improve the development results of our investments.

In 2010, the Bank instituted a comprehensive reform agenda to modernize its services and improve their delivery. Underlying these internal reforms was the commitment to enhance transparency and governance, strengthen accountability and focus on results. In order to gauge progress made by the Bank on its reform agenda, the Bank developed a Corporate Scorecard to monitor its overall performance, including progress on internal reforms. The Scorecard provides quantitative indicators that measure development results and performance. It is complemented by the World Bank for Results report, which is qualitative in nature. This report, which provides context and information related to the scorecard indicators, highlights areas of progress as well as those that require further attention. These documents, which will enhance accountability and transparency, were published for the first time at the 2011 Annual Meetings. In addition, the World Bank has put in place the Reform Secretariat to monitor, advise on and report on internal reforms, and to support Senior Management in managing the reform process.

2011–2013 Action: World Bank Group and IMF leadership positions should be staffed through open, transparent and merit-based selection processes, regardless of candidate nationality.

Grade Not applicable

The World Bank Group Presidency is held by Mr. Robert Zoellick. Mr. Zoellick’s five-year term expires in 2012, and Canada will advocate for a staffing process that is transparent, merit-based and open to candidates from all member countries.

2) Institutional Effectiveness

The Government of Canada is committed to ensuring that the Bretton Woods Institutions (BWIs) are effective in carrying out their mandates. This means that the World Bank Group must focus services on its core competencies, respond to member country demands, coordinate with other international partners, and explore innovative ways to reach its goals.

Priority 2.3: Resources and Lending Facilities

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.

2011–2014 Action: The financial sustainability of IDA should be evaluated and the current acceleration policy should be formalized and respected.

      Good progress

As part of the IDA16 replenishment negotiations (see the box entitled “IDA16 Replenishement), Canada and other contributors pressed for greater dialogue on the issue of IDA’s financial sustainability. In response, a working group on IDA’s long-term financial sustainability has been struck, with the objective of facilitating discussion and feedback on high-level proposals to enhance IDA’s long-term financial sustainability and reviewing those proposals in the context of longer-term financial trends, key funding and operational constraints, underlying assumptions (e.g. graduation), and the impacts on the broader development aid environment. The working group is expected to conclude its discussions in time for possible inclusion in the IDA17 replenishment discussions, beginning in 2013.

A number of IDA graduates with high per capita incomes and ready access to financial resources at commercial rates have outstanding IDA credits and continue to benefit from highly concessional IDA resources. IDA’s acceleration policy, which shortens the maturities on certain credits outstanding from middle-income countries, leads to a more rapid recycling of IDA resources and enhances IDA’s ability to redirect funds towards those countries with the greatest needs. In 2011, IDA’s accelerated repayment clause was implemented for the first time for the qualifying credits of seven eligible IDA graduates (Albania, China, Egypt, Equatorial Guinea, Indonesia, FYR Macedonia and Saint Kitts and Nevis). The accelerated reflows increased the internal resources available for the IDA16 commitment authority by SDR 1.2 billion (equivalent to US$1.8 billion). Additional countries will become subject to this policy in line with the terms of their credit agreements.

Priority 2.4: Aid Effectiveness

Getting the best development outcomes from international assistance contributions 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 its aid programs, including its multilateral support.

2011–2013 Action: IDA should increase its focus on results, including by:

• Establishing a panel of experts to make recommendations on how to strengthen the Bank’s impact evaluations.
• Increasing the number of impact evaluations, with an increase of at least 20 per cent for IDA projects by the end of IDA16.
• Developing country program self-assessment methodology.
• Presenting a results-based lending instrument to the Executive Board for approval.
• Expanding reporting on core indicators from four to seven sectors and including additional select indicators for IDA countries.
• Mapping evaluation tools appropriate for different IDA operations.

      Good progress

IDA has made much progress on increasing its focus on results. In 2011, a panel of experts was established to provide recommendations on how to strengthen the Bank’s impact evaluations. The recommendations are currently being implemented by IDA. In addition, IDA is on track to increase the number of impact evaluations used for its projects by at least 20 per cent by the end of IDA16.

The World Bank will report on progress made on developing country program self-assessment methodology during the IDA16 Mid-Term Review, scheduled for late 2012. The World Bank is also on track to deliver a results-based lending instrument to the Executive Board for approval, an expanded set of core indicators on which to focus reporting, and a review of the implementation of the Crisis Response Window.

2011–2013 Action: The World Bank Group should implement a Corporate Scorecard for all of its institutions, including IDA’s new Results Management System.

      Good progress

At the 2011 Annual Meetings, Governors endorsed the first Corporate Scorecard, which aims to contribute to a more efficient and effective World Bank Group by facilitating strategic dialogue between Management and the Executive Board on progress made and areas that need attention.

The Corporate Scorecard is aligned with the World Bank Group’s Post-Crisis Directions, the modernization agenda, the Results Measurement System defined as part of the IDA16 replenishment and the Millennium Development Goals.

Long-Term Action: The IFC should maximize the development effectiveness of its operations by:

• Demonstrating its additionality by continuing to focus on addressing market gaps in private sector financing.
• Focusing a larger share of its programming on economic growth in the world’s poorest countries, which includes:
  • Transferring a robust portion of IFC net income to IDA based on a rules-based formula.
  • Maintaining a large share of operations in IDA-eligible countries.
  • Enhancing the measurement and evaluation of the development framework.

      Good progress

In 2011, the IFC continued to demonstrate additionality by offering clients a unique combination of investment and advisory services. The IFC focuses on underserved markets, including IDA-eligible countries and frontier markets.

To support sustainable economic growth in the world’s poorest countries, the IFC transferred US$600 million to IDA, in keeping with its commitment made in the IDA16 replenishment. This transfer accounted for 28 per cent of the IFC’s net income in 2011. In addition, the IFC committed US$4.9 billion in new investments to 251 projects in IDA-eligible countries (39.9 per cent of all new commitments). This amount is consistent with new commitments in 2010 totalling US$4.9 billion for 255 projects in IDA-eligible countries (38.5 per cent of all new commitments).

In order to enhance the measurement and evaluation of the development framework, the IFC began testing six development goals in 2011, which include a focus on improving its results in a number of sectors including agribusiness, health, education and climate change. The testing of these goals will continue in 2012. In addition, the IFC continues to measure results using the Development Outcomes Tracking System and undergo evaluations conducted by the Independent Evaluation Group.

Long-Term Action: 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.

      Good progress

As part of the IDA16 replenishment negotiations, Canada pressed for robust transfers of net income to IDA, which provides financing to the poorest countries in the world, from both the IBRD and the IFC. As part of IDA16, the IBRD agreed to transfer SDR 1.3 billion in net income and SDR 0.7 billion in grants from the IFC, based on evaluations of the institutions’ financial capacities and subject to availability of net income. Together, this is equivalent to an aggregate World Bank Group contribution of US$3.0 billion.

Alignment 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.

2011–2013 Action: The World Bank Group should increase health system investments, which are foundational for improvements in maternal and child health.

      Good progress

The World Bank Group’s current strategy is to help enhance health outcomes through improved health system performance. In 2011, the Bank continued to help countries improve the health of their people, especially women and children, control disease and strengthen health systems.

Throughout 2011, the World Bank Group initiated an important number of health systems and health sector support projects, including in Bangladesh, Burkina Faso, the Democratic Republic of Congo, India, Kenya, Mali, and Tanzania.

Long-Term Action: The World Bank Group should increase the amount of effective programming to facilitate agriculture, increase food security and improve nutrition.

      Good progress

Canada commends the World Bank Group for playing a leadership role in the response to the global food security crises and for pressing for broader and more effective responses by governments, the private sector, civil society, philanthropic organizations and the multilateral development system at large. The World Bank Group has also been at the forefront of many efforts to increase support for agriculture and improve food and nutrition security. In 2011, the World Bank Group’s short-term emergency food crisis response focused on preserving access to food for the poor and vulnerable without undermining longer-term farm incentives to increase investment and production, for example through the Global Food Crisis Response Program.

The World Bank Group’s longer-term responses focus on actions outlined in the World Bank Group Agriculture Action Plan: FY2010–12, which was reviewed by the Executive Board in 2011. These actions include raising agricultural productivity; linking farmers to markets and strengthening value chains; better managing risks and reducing future vulnerabilities; supporting rural non-farm income and sustainable social safety nets; enhancing environmental services and sustainability; and supporting scaling-up nutrition.

The World Bank Group has also continued to leverage partnerships in order to reduce fragmentation and transaction costs, as exemplified by the Global Agriculture and Food Security Program and the Consultative Group on International Agricultural Research.

Long-Term Action: The World Bank should continue to make significant contributions in Canada’s priority countries of focus.

      Good progress

The World Bank is highly decentralized and maintains a field presence in all of Canada’s countries of focus. Below are examples of the World Bank’s results in some of Canada’s countries of focus.

In Haiti, World Bank support contributed to the following results:

• To help Haiti recover from the January 2010 earthquake, it housed and equipped the Ministry of Economy and Finance and Tax Office (over 500 staff), allowing salaries to be paid, revenues to be collected and economic governance efforts to continue.
• It conducted building assessments of 400,000 buildings in Port-au-Prince; developed and disseminated building guidelines for housing reconstruction; developed building guidelines for public buildings, schools and hospitals; trained a cadre of engineers who are training others on better building techniques; and disseminated information in neighborhoods on safe building practices.
• It provided major support to the education sector. Since the earthquake, the Bank has financed 210,000 tuition waivers and school meals for 75,000 every day. Access is being expanded and quality enhanced over the next three years.
• It set up the first environmentally and socially sound debris management site in Haiti—with a capacity sufficient to treat the bulk of earthquake debris from Port-au-Prince.

In Afghanistan, World Bank support contributed to the following results: 

• The National Emergency Rural Access Project is working to provide year-round access to rural areas. Since 2007, over 1,251 kilometres of district and village roads and more than 9,000 metres of cross drainage structures have been completed.
• Community empowerment efforts reach 19 million people in all of the country’s 34 provinces. As of March 4, 2011, approximately 26,600 communities have been mobilized, and about 26,300 have successfully elected Community Development Councils.
• Since 2003, 762 medium- and large-size traditional irrigation schemes serving more than 687,000 hectares of land in various parts of the country were rehabilitated. An additional 138,000 hectares of land are now receiving irrigation, and crop yields have increased substantially.

In Mali, World Bank support contributed to the following results: 

• 43,311 off-grid connections in households and for public lighting have been made to provide electricity access to about 650,000 people. In addition, through the project, about 800 public institutions including 172 schools and 139 health centres have been provided with access to off-grid electricity. 
• Over a period of six years, more than 7,900 solar home systems and more than 500 solar photovoltaic systems were installed. This has served to introduce renewable energy technologies into Mali’s rural energy mix.

Priority 2.5: Innovation for Private Sector Participation in Development

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.

2011 Action: 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.

      Some progress

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 contributed $50 million to the Private Sector Window of the Global Agriculture and Food Security Program, 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.

In 2011, the Private Sector Window launched an open call for proposals. A wide range of proposals from different private sector firms around the world were received. In 2012, the Private Sector Window will focus on providing financing and advisory service support to eligible private sector firms.

2011–2013 Action: 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.

      Good progress

There is a need 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. At the G-20 Leaders Summit in Toronto in June 2010, 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 has been working with the World Bank and other interested partners to develop results-based innovative financing mechanisms to support agricultural productivity gains. In 2011, more than 40 project proposals were reviewed by an independent expert advisory group. The project proposals shortlisted by the advisory group will be further developed in 2012.

2011 Action: The World Bank Group should have additional innovative private sector funding facilities for small and medium-sized businesses.

      Good progress

The G-20 SME Finance Challenge, an innovative web-based competition launched as part of the 2010 G‑20 Leaders Summit in Toronto, is designed to provide support for growth-oriented small and medium-sized businesses in developing countries, thereby making a significant contribution to poverty reduction through job creation. At that time, Canada also announced that it would provide $20 million as part of a global effort to implement and scale up the 14 winning proposals of the SME Finance Challenge.

In 2011, Canada followed through on this commitment by helping to launch the global SME Finance Innovation Fund, which is hosted by the IFC. Although the IFC’s due diligence process has taken longer than originally anticipated, funding approvals and disbursements to the winning proposals have begun. Through the IFC, Canada continues to work with other potential contributors to finance SME Finance Challenge winners, through both the SME Finance Innovation Fund and parallel processes.

2011 Action: The World Bank Group’s climate funding should include facilities to enhance private sector participation in addressing climate change.

      Good progress

Canada has provided $291.5 million for the new Canadian Climate Change Fund in order to support a broad portfolio of clean energy projects administered by the IFC. The fund became operational in June 2011. The 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.

Since the fund’s inception, $33 million has been delivered to five projects in Africa and Latin America, including initiatives to support wind power in Lesotho and greener power and water services to Guinea-Bissau. These projects will help eliminate more than 700,000 tones of greenhouse gas emissions every year.

2011–2013 Action: 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.

      Good progress

In 2010, Governors of MIGA approved amendments to its convention for the first time since the agency was established in 1988. The changes expanded MIGA’s eligibility criteria, allowing the agency to support a broader range of development projects.

The changes to MIGA’s convention have been operationalized. In 2011, MIGA issued US$2.1 billion in new guarantee coverage (an increase from US$1.5 billion in 2010), a significant amount of which resulted from the expanded eligibility criteria approved in 2010. New guarantees resulting from the convention amendments were issued for projects in several different regions and sectors.

3) Sustainable Poverty Reduction and Growth

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.

Priority 3.1: Debt Sustainability

2011–2013 Action: 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 Debt Sustainability Framework.

      Good progress

Canada and other debt management stakeholders have submitted comments to the World Bank and IMF to help guide their upcoming review of the Debt Sustainability Frameworks for market access and low-income countries. As the reviews continue through 2012, Canada will work with other stakeholders to ensure the Debt Sustainability Framework remains a useful tool for future sovereign lenders.

2011–2013 Action: 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.

      Good progress

The World Bank’s Debt Management Facility was launched in 2008 to support the scaling up and accelerated implementation of the Bank’s debt management work program in IDA-eligible countries. Canada was one of the first contributors to the Multi-Donor Trust Fund created to finance this initiative, providing $2 million, and new donors have continued to join to provide additional financing support. The facility continues to support debt management capacity building in low-income countries.

Priority 3.2: Fragile and Conflict-Affected Countries

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 these 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 2011 World Development Report on conflict, security and development.

2011–2013 Action: The World Bank Group should improve its engagement in fragile and
conflict-affected countries, including by:

• Reviewing the funding allocation mechanism for these countries.
• Completing the evaluation of IDA’s work in these countries.
• Adopting an improved World Bank Operational Policy on Development Cooperation and Conflict.
• Completing the revision and testing of the new Post-Conflict Performance Indicators criteria, and publicly disclosing country scores.
• Improving its collaboration with relevant UN agencies on issues related to its engagement in fragile and conflict-affected countries.

      Good progress

In 2011, the World Bank Group successfully completed several initiatives to improve its engagement in fragile and conflict-affected countries, including:

• A review of the funding allocation mechanism for these countries was conducted, and a new mechanism was approved for IDA16. The Bank is continuing this research and will provide an update.
• A revision and testing of the new Post-Conflict Performance Indicators criteria were completed and country scores were publicly disclosed.
• The Bank released its first ever World Development Report on the topic of conflict, security and development.

Other initiatives underway and on track for delivery by deadlines include evaluating IDA’s work in fragile and conflict-affected countries and adopting an improved World Bank Operational Policy on Development Cooperation and Conflict.

In addition, the World Bank Group is undertaking efforts to improve its collaboration with relevant UN agencies, as evidenced by increases in personnel exchanges between the two organizations and more inclusive working groups in countries where both institutions have a presence.

Priority 3.3: Gender

Canada continues to encourage the World Bank to create a strong and consistent monitoring and results framework across Bank initiatives to make transparent how gender is being integrated and tracked.

2011–2013 Action: The World Bank Group should accelerate progress on gender mainstreaming and gender-related Millennium Development Goals by:

• Ensuring that all of IDA’s Country Assistance Strategies draw on the findings of gender assessments.
• Preparing regional Gender Action Plans.
• Tracking the percentage of (i) safety net projects designed to mitigate risk and vulnerability for women and girls, (ii) agriculture and rural development operations that target women, and (iii) health projects that address high fertility and maternal mortality.

      Some progress

The World Bank Group’s 2011 Corporate Scorecard highlighted how the organization has integrated gender equality into its operations in order to better support the achievement of development results. For example, the share of Country Assistance Strategies (CASs) and Country Partnership Strategies (CPSs) that drew on the findings of a gender assessment increased to 83 per cent in FY2010. While this is positive, it is still below the Bank’s target of having all CASs and CPSs gender-informed by the IDA16 Mid-Term Review.

In addition, 53 per cent of recent operations have a gender-informed design, and World Bank Group management is continuing to implement its gender mainstreaming action plan to support further improvements. The Bank continues to make progress on the tracking of gender-related actions under the IDA16 Results Measurement System, including safety net projects designed to mitigate risk and vulnerability for women and girls, agriculture and rural development operations that target women, and health projects that address high fertility and maternal mortality. Preliminary results on these actions will be available at the time of the IDA16 Mid-Term Review.

While these results are satisfactory, more progress needs to be made in order to achieve the targets outlined in the Corporate Scorecard and the IDA16 Results Measurement System. The companion piece to the 2012 World Development Report on gender equality and development, “Implications of World Development Report 2012: Gender Equality and Development for the World Bank Group,” has set the future directions for the Bank’s operational work on gender equality. Canada expects that it will help the Bank strengthen client demand for gender equality, increase gender mainstreaming and achieve 100 per cent coverage for gender-informed CASs and CPSs.

Priority 3.4: Environment

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.

2011–2013 Action: Climate change considerations should be integrated into all IDA activities, particularly by:

• Addressing climate change vulnerabilities in all of IDA’s Country Assistance Strategies.
• Scaling up IDA’s analytic and advisory activities on adaptation and mitigation.
• Tracking climate change funding through internationally agreed markers such as the Rio Markers. IDA will also establish a coding system to measure the share of IDA investments and projects that provide climate adaptation and mitigation co-benefits.

      Good progress

The Bank supports adaptation and mitigation programs across sectors while helping countries take advantage of new economic, capacity-building and financing opportunities that arise from the global climate change agenda. With the support of the Bank, a number of countries have put in place more effective national environmental policies and strategies, with a particular focus on better protecting the most vulnerable groups from environment-related health concerns and risks, such as water and air pollution. The Bank has also supported low- and middle-income countries in integrating a sustainable development approach in key sectors such as tourism, agriculture, fisheries, mining, forestry, housing, transport, water and energy.

The World Bank has made progress on integrating climate change considerations into IDA activities. For example, of the 34 Country Assistance Strategies and Country Partnership Strategies prepared in FY2010, 30 addressed climate change. Progress continues on addressing climate change vulnerabilities in all of IDA’s Country Assistance Strategies, scaling up IDA’s analytic and advisory activities on adaptation and mitigation, and tracking climate change funding through internationally agreed markers such as the Rio Markers. Preliminary results on these actions will be available at the time of the IDA16 Mid-Term Review.

2011–2013 Action: The World Bank Group’s climate change trust funds should enable developing country partners mitigate and adapt to climate change.

      Good progress

In 2011, the World Bank continued to support climate-resilient and low-carbon investments by combining and leveraging a suite of financing instruments, including its trust fund operations. For example, the Bank-facilitated Forest Carbon Partnership Facility, through its Readiness Fund and Carbon Fund, has mobilized over US$440  million in pledged and committed funding for capacity building and performance-based payments to pilot projects that aim to open financial flows for activities related to forest and land management.

Priority 3.5: Sustainability Standards

As Canada seeks innovative ways to increase private sector participation in development through the World Bank Group, it will be important to ensure that these initiatives contribute to environmental and social objectives.

2011 Action: The World Bank Group should approve and implement the revised Policy and Performance Standards on Social and Environmental Sustainability.

      Good progress

Following 18 months of consultations with a wide range of stakeholders, the IFC’s Sustainability Framework has been updated. The Sustainability Framework promotes sound environmental and social practices, encourages transparency and accountability, and contributes to positive development impacts. The IFC’s Performance Standards, which are part of the Sustainability Framework, have become globally recognized as a benchmark for environmental and social risk management in the private sector.

As of January 1, 2012, the updated edition of the IFC’s Sustainability Framework applies to all investment and advisory clients whose projects go through the IFC’s initial credit review process. The updates reflect the evolution in good practice for sustainability and risk mitigation over the past five years. They incorporate modifications on challenging issues that are increasingly important to sustainable businesses, including supply-chain management, resource efficiency and climate change, and business and human rights.

2011–2013 Action: 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.

      Good progress

The global Extractive Industries Transparency Initiative (EITI), established in 2003, promotes and supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining. To support the Bank’s work with the EITI, a Multi-Donor Trust Fund was created. Canada has contributed a total of $2.65 million towards this trust fund.

Through the trust fund, the World Bank Group has supported the global initiative by administering funds to provide technical and financial assistance to countries implementing or considering implementing the EITI. The support has included making EITI advisers and consultants available to governments to assist them in implementation, and providing grants to governments to help support EITI implementation. To date, the trust fund has provided country-level support, including 11 grants completed and closed (US$3.4 million), 23 grants currently signed/active (US$8.7 million, of which US$3.9 million has been spent by recipient countries), and 6 new grants which are being processed (US$2.0 million). Additionally, there are 4 pending post-compliance grants for a total value of $1.1 million. Further, initiatives have been undertaken to share international best practices, including two workshops on new EITI rules in 2011, a workshop on EITI for practitioners in East Asia, and an update of the Implementing EITI publication, with a planned launch in April 2012.

Canada’s Objectives at the World Bank Group in 2012 

In 2011, the World Bank Group improved how it establishes and reports on its priorities, including through its World Bank for Results 2011 report (available at www.worldbank.org). As a result of this improved self-reporting, this document does not repeat the broad and comprehensive set of priorities for the World Bank Group, as was done in previous years. Instead, it focuses on clear and measurable actions that the Government of Canada will take to engage the World Bank Group in the coming year.

In the interests of effective governance, the objectives in this year’s report are concrete and measurable actions that the Government of Canada will take to engage the World Bank Group in 2012 through a number of channels, including through our Executive Director.

 

 

Background on the World Bank Group 

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 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.

What the World Bank Group Does

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 in this background section are for the World Bank Group’s 2011 fiscal year (July 1, 2010 to June 30, 2011) unless otherwise indicated.

Agencies, Membership and Governance Structure

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, including Canada.

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 its 2011 fiscal year, the IBRD loan portfolio included commitments of US$26.7 billion to 132 projects in 43 countries.

Latin America and the Caribbean received the largest portion of IBRD funding in 2011 (34 per cent), followed by East Asia and Pacific (24 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 25- 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 2011. Countries that are eligible for IDA lending and also have an active IBRD lending program are charged a modest interest charge for loans from IDA.

New IDA commitments are financed through contributions from donor governments, including Canada, annual transfers from IBRD net income, transfers from IFC net income, and 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. The 16th replenishment round concluded in December 2010.

Africa received the largest share of IDA resources in 2011—US$7.0 billion, or 43 per cent of total commitments. South Asia received 39 per cent of new commitments, totalling US$6.4 billion.

IBRD and IDA lending for infrastructure (Transportation; Energy and Mining; and Water, Sanitation, and Flood Protection) combined for approximately 44 per cent of total lending in 2011. Other sectors that were a major focus for lending included Public Administration, Law and Justice (22 per cent); and Health and Other Social Services (16 per cent).

 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 2011, the IFC committed US$12.2 billion in new investments. The IFC’s total portfolio grew to US$42.8 billion from US$38.9 billion the previous year. New commitments included US$3.0 billion in Latin America and the Caribbean, US$2.7 billion in Europe and Central Asia, US$2.2 billion in Sub-Saharan Africa, US$1.6 billion in the Middle East and North Africa, US$1.9 billion in East Asia and the Pacific, and US$0.7 billion in South Asia.

 

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 2011, the total amount of guarantees issued for projects in MIGA’s developing member countries was US$2.1 billion. This is an increase from US$1.5 billion in guarantees issued in 2010.

 

ICSID—International Centre for Settlement of Investment Disputes

ICSID, established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, provides facilities for conciliation and arbitration of investment disputes between member countries and foreign investors. Canada signed the convention in 2006, but is not yet a member as it is in the process of ratifying the convention. ICSID membership would provide Canadian investors with an additional mechanism for the resolution of investment disputes pursued under international arbitration.

The World Bank Group’s Internal Checks and Balances

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 on the World Bank website.

Internal Audit D  epartment

The Internal Audit Department’s work primarily focuses on determining whether the World Bank Group’s 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.

During the 2011 fiscal year, the World Bank Group hired its first ever World Bank Group–wide Chief Risk Officer, who is responsible for: assessing risks across the World Bank Group including possible interactions among types of risk; benchmarking existing risk management practices against major financial institutions; ensuring consistency of World Bank Group risk management activities with best practice; and considering unique risks that are specific to multilateral development banks and international financial institutions.

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. More information on the Panel is available on the World Bank website.

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 on its website.

Department of Institutional Integrity (INT)

INT investigates allegations of fraud and corruption in World 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 World Bank Group funds and ensure they are used for intended purposes. During the past fiscal year, INT conducted 83 investigations and debarred 35 individuals and companies. More information on INT can be found on the World Bank website.

Canada’s Engagement at the World Bank Group

The World Bank Group is governed by member countries, each of which owns shares of the agencies that make up the World Bank Group. Decision-making power is primarily exercised by countries through their Governor and Executive Director, depending on the nature of the decision, and during negotiations on capital increases and fund replenishments.

Canada’s Shareholdings

Canada is among the top 10 shareholders at the World Bank Group, having contributed a total of US$5.5 billion in capital subscriptions to the IBRD, IFC and MIGA and US$8.9 billion in contributions to IDA. Canada’s voting power ranges from 2.51 per cent to 3.38 per cent within the Bank’s different institutions.

Table 5
Canada’s Capital Subscriptions
(US$  millions, unless otherwise indicated)

	IBRD	IDA	IFC	MIGA
Capital subscriptions and contributions	5,403.8	8,943.81	81.3	56.5
Amount paid in	334.9	8,943.81	81.3	10.7
Amount not paid in but contingent   on future capital requirements	5,068.9	–	–	45.8
Subscription share (%)	2.79	4.38	3.43	2.96
Voting power (%)	2.73	2.55	3.38	2.51
Note: Figures are from the 2011 financial statements and annual reports for the World Bank, IFC and MIGA. 1 Represents Canada’s cumulative contributions and commitments made through IDA15.

Canada’s Governor at the World Bank Group

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 Honourable James M. Flaherty, P.C., M.P.

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 2011 are shown below.

Canadian Statements at the Development Committee of the Boards of Governors
of the World Bank and IMF, 2011

The Honourable Jim Flaherty, Minister of Finance for Canada,

on behalf of 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

Washington, DC
April 16, 2011

On behalf of Canada, Ireland and the Caribbean countries that comprise our constituency, I would like to express our appreciation and support for the leadership of the World Bank Group, particularly as it has navigated the economic challenges we have faced over the past years. The World Bank continues to play an important role in helping to mitigate the effects of the recent financial and economic crisis for developing countries. New resources from an unprecedented capital increase and an historic International Development Association (IDA) replenishment will allow the Bank to continue to lead in global poverty reduction and economic development.

Each year, as a way of increasing accountability towards its own citizens, Canada establishes a set of priorities for the World Bank and publishes a report highlighting the Bank’s performance. I would like to highlight three priorities for Canada and our constituency: first, agri-finance, food security and agricultural productivity; second, the creative pursuit of results; and third, peace, security and development. These are areas in which the Bank is already hard at work, and in which continued progress would be welcomed.

Recent and ongoing events in the Middle East and North Africa highlight the need for accountable and transparent governance as well as sustained and inclusive economic growth. We are pleased to see the Bank’s leadership and engagement to ensure a coordinated response which will contribute to a brighter future for the people of the region.

Agri-Finance, Food Security and Agricultural Productivity

It is important the Bank show continued leadership in the fight against global hunger. In this context, we support the Bank’s new Africa Strategy and its active engagement in programs such as the Scaling Up Nutrition Initiative, which is of critical importance to our Irish colleagues, given their historical experience.

The Bank is devoting significant resources to increasing long-term food supplies in developing countries by helping to improve the productivity of farmers and increase their access to markets, while also supporting those most affected by the recent spike in food prices in the short term. As key participants of the Global Agriculture and Food Security Program, we welcome the operational launch of the private sector component, which will expand access to credit for farmers and small businesses in the agricultural sector in low-income countries. These efforts should moderate global food price volatility over time and reduce the need for emergency assistance going forward.

In addition, we appreciate the engagement of the World Bank and other interested donors in drawing on the successes of the Advance Market Commitment for pneumococcal vaccines to create a new mechanism that would encourage private-sector-led innovation to benefit farmers in the developing world.

The Creative Pursuit of Results

The World Bank Group is demonstrating its commitment to using its resources to provide maximum development impact, manage and track results, and incorporate the results of evaluations and research into policy decisions. We are pleased to see the Bank sharpening its focus on results measurement as a major part of the agreed reforms and the IDA replenishment process that secured funding for the coming three years. We encourage the Bank to identify the most effective programs and to direct available resources towards areas of maximum effectiveness. The Bank’s leadership in this area can lead to benefits throughout the global development community.

The creative pursuit of results, including poverty eradication through the promotion of private-sector participation, inspired Canada to lead the development of the Group of Twenty (G-20) Small and Medium Enterprise Finance Challenge. This international competition is providing financing to scale up successful initiatives focused on boosting investment in small and medium-sized enterprises including Canada’s Peace Dividend Trust, which helps local entrepreneurs in post-conflict countries through guaranteed credit lines. We are pleased to see strong World Bank Group support, including through the International Finance Corporation and the Multilateral Investment Guarantee Agency, for initiatives that help poor countries achieve sustainable economic growth through private-sector development. These initiatives are consistent with the Canadian International Development Agency’s new Sustainable Economic Growth Strategy. We look forward to engaging the World Bank Group further in the area of finance for small and medium‑sized enterprises.

Finally, it is increasingly clear that neither public-sector nor private-sector approaches to development are sufficient on their own. We would like to encourage even greater cooperation and integration among the public- and private-sector arms of the Bank.

Peace, Security and Development

We welcome this week’s launch of the 2011 World Development Report, which focuses on conflict, security and development. We welcome the leading role that the Bank has taken in these fields.

We also look forward to the conclusion of the 2012 World Development Report dealing with gender equality.

Washington DC
September 24, 2011

I would like to begin by congratulating one of this constituency’s own leaders, Prime Minister Ingraham of the Bahamas, on his appointment as Chair of the Board of Governors of the International Monetary Fund and World Bank.

On behalf of our constituency, I would like to recognize the important contributions that this institution has been making as our instrument for delivering on the needs of emerging and developing economies around the globe. Two weeks ago, I participated in a meeting of Finance Ministers that comprise the Deauville Partnership, which was established to support the historic changes underway within some countries in the Middle East and North Africa. The collaborative and multilateral nature of this Partnership, which includes important contributions from the World Bank Group, serves as a clear reminder of why I have been and continue to be a strong supporter of this institution and the important work that it undertakes.

As the Development Committee representative for this large and diverse constituency, it is important to focus on and balance many legitimate priorities. On behalf of Canada, Ireland and the Caribbean countries that I represent, I want to proceed by raising a number of key issues that we advocate as being priorities for the Bank over the coming year. First amongst these issues is that the Bank continue responding to the needs of its members arising from the financial and economic crisis. Second is the difficult journey of meeting current development challenges, including food security, climate change, gender equality and job creation.

1. Responding to the Needs of Its Members

Recent developments have increased risk and uncertainty in the global economy, and new challenges have emerged. Some regions, including the Caribbean, continue to suffer from the fallout of the global financial and economic crisis. The economic recovery has been tepid, exacerbated by high fuel prices, inflation in essential food items, lower remittance flows and declines in the key tourism sector. We urge the World Bank Group to continue its support to the Caribbean region to assist in the recovery of these economies.

We appreciate the World Bank’s leadership role in driving the multilateral development banks’ efforts as part of the Deauville Partnership, including the development of a Joint Action Plan for the Middle East and North Africa region by international financial institutions. This Plan will strengthen governance, improve economic and social inclusion, create jobs for youth in particular, and accelerate private sector-driven economic growth in order to underpin democracy. A strong and coordinated multilateral response to the Arab Spring is critical to supporting the reforms that its people are demanding.

In this context, earlier this year the World Bank released its World Development Report: Conflict, Security, and Development. The promising steps being made within the Middle East and North Africa continue to underscore the important recommendations described in this report. The knowledge generated from this important project needs to continue to influence policy direction and drive programming and operational decisions.

Like all governments, we must demand continuing value in our recapitalization and replenishment investments, particularly given fiscal consolidation that is underway. Our investments were met with commitments by the World Bank to modernize and reform its own operations. To this end, we welcome the process of continuous improvement currently ongoing within the World Bank to ensure it can meet the development challenges of today and tomorrow. In particular, the Corporate Scorecard and the World Bank for Results Report, both of which are being published for the first time at these annual meetings, will enhance accountability and transparency to both internal and external stakeholders.

2. Meeting Current Development Challenges

a) Food Security

A major focus across our constituency is the issue of food security. Increased food prices and excessive food price volatility can have a particularly detrimental impact on the food security of the world’s poor.

Increasing food prices, conflict and successive seasons of drought have resulted in a humanitarian crisis in the Horn of Africa. Through our replenishment contributions to the International Development Association, we were pleased to support the creation of a new Crisis Response Window that is designed to help address important issues such as this.

Canada is also pleased to be partnering with the World Bank on the Global Agriculture and Food Security Program and the Agriculture Pull Mechanism Initiative to increase agricultural development and harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agricultural development in poor countries. We look forward to expert recommendations on potential Agriculture Pull Mechanism Initiative pilot projects and partnering with the World Bank on an implementation agenda.

Canada and Ireland, along with the World Bank, strongly support the Scaling Up Nutrition movement and we have increased our support for programs that are improving the health of poor people and reducing maternal, infant and child under-nutrition.

b) Climate Change

We also strongly support the Bank’s focus on the challenge of climate change as its effects—higher temperatures, changes in precipitation patterns, rising sea levels, and more frequent weather-related disasters—pose great risks for agriculture, food, and water supplies. At stake are recent gains in the fight against poverty, hunger and disease, and the lives and livelihoods of billions of people in developing countries.

Earlier this year, Canada provided the International Finance Corporation with $285.7 million to be used as concessional financing for a broad portfolio of clean energy projects in developing countries, as part of Canada’s commitment to support mitigation efforts. This investment, which is part of Canada’s three-year Fast Start climate change financing commitment under the Copenhagen Accord, will leverage private financial flows for low-carbon investment and achieve significant reductions in emissions, slowing the onset of global climate change. Particularly in an era of fiscal consolidation, leveraging private sector resources will be critical to achieving long-term climate financing objectives.

c) Gender Equality

A third development challenge that we recognize is that of gender equality. We welcome the 2012 World Development Report: Gender Equality and Development, and expect that it will put an end to doubts about the business case for gender equality. As the report notes, gender equality is a core development objective in its own right but it also makes for smart economics. This is why gender equality should become an integral component of all corporate results frameworks, including at the country level. Only a fair, just and equal society will be resilient enough to face the pressing challenges of the global economy, including those of food security and climate change discussed above.

d) Job Creation

The fourth development challenge is ensuring that our economies are sufficiently robust that they produce secure and well-paying jobs. As the Arab Spring has reminded us very clearly, the creation of quality jobs and finding ways to include people in the economies of their countries are critical for sustainable development and should be central to our development efforts. A job creation strategy is central to living standards, productivity growth, environmental sustainability, social change and social cohesion.

To this end, we also look forward to the release of next year’s World Development Report, which will focus on this important topic of job creation.

In conclusion, the members of our constituency believe that the World Bank Group is well positioned to respond to the diverse and complex development needs of its members and to contribute to resolving complex global challenges.

The Canadian Executive Director at the World Bank Group

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. At the end of 2010, new shareholding and voting reforms were agreed for the IBRD, which will result in a shift in voting shares in favour of developing countries and emerging economies as member states subscribe to the general and special capital increases. As a result of these voice reforms, Canada will fall from the seventh largest owner of voting shares to the eleventh largest.

Table 6
Voting Power of the 12 Largest Members at the World Bank (IBRD)
Pre- and Post- Voice Reforms
% of Total Voting Shares

Country	Pre-Voice Reforms	Post-Voice Reforms
United States	16.36	15.85
Japan	7.85	6.84
China	2.78	4.42
Germany	4.48	4.00
France	4.30	3.75
United Kingdom	4.30	3.75
India	2.78	2.91
Russian Federation	2.78	2.77
Saudi Arabia	2.78	2.77
Italy	2.78	2.64
Canada	2.78	2.43
Brazil	2.07	2.24

Shareholders typically raise serious questions or concerns about specific Bank operations before they get to the Executive Board. In addition, Executive Directors may abstain or vote against projects or policies in consultation with their constituencies. In 2011, the Executive Director representing Canada supported all policies and projects approved by the Board, with one exception.

Members of the Executive Director’s Office at the World Bank
(as at December 31, 2011)

Canada’s Financial Contributions to the World Bank Group in 2011

Canada is an important provider of donor funding for the World Bank Group. In 2011, Canada made the following contributions:

IDA Payment: $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.

Canada provided $384 million to IDA in 2011. 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.

As a result of the recently concluded IDA16 replenishment negotiations, Canada’s annual contribution will increase to $442 million beginning in 2012. See the box entitled “IDA16 Replenishment” for more information.

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 2011, Canada provided $51.2 million to the World Bank Group for the MDRI.

World Bank Group Trust Funds

Canada contributes to a number of World Bank–administered Multi-Donor Trust Funds. Trust funds 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.

Table 7
Canadian Contributions to World Bank Group Multi-Donor Trust Funds (Over $5 million)
(millions of dollars)

Disbursement	20111
Forest Carbon Partnership Facility (Readiness Fund)	40
Afghanistan Reconstruction Trust Fund	29
Least Developed Country Fund for Adaptation to Climate Change	20
Afghanistan Education Quality Improvement Program	16.5
Afghanistan Strengthening Health Activities for the Rural Poor	15
Support to Haiti Action Plan for National Recovery and Development	15
Bangladesh Strengthening Public Expenditure Management Program	10
African Capacity Building Foundation III	10
Entrepreneurship Program for Innovation in the Caribbean	8
Supporting Economic Management in the Caribbean	8
Punjab Education Development Project	6.82
Ethiopia Agricultural Growth Program	6
Canada Climate Change Fund2	291.5
1 Calendar year. 2 Funding was through the Department of Finance, and included $5.8 million in grant financing to support advisory services as well as $285.7 million to be used as concessional financing. Sources: CIDA and the Department of Finance.

 

Table 8
Canadian Contributions to World Bank Group Global Initiatives
(millions of dollars)

Initiative	1999–2000 to 2009–2010	2010–111	April 1 – December 31 2011	Total Since 1999–2000
Consultative Group on International   Agricultural Research	200	21.82	–	221.82
Vaccine Advance Market Commitment	115	20.3	22.9	158.2
Global Fund to Fight AIDS,   Tuberculosis and Malaria	828.4	150	180	1158.4
Global Alliance for Vaccines   and Immunization	188	20	–	208
Global Environment Facility	492.5	60.4	54.75	607.65
1 April 1, 2010 to March 31, 2011. Source: CIDA.

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