Washington, DC, October 9, 2010
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
We believe that international financial institutions provide an important vehicle through which member countries put international cooperation into practice. The World Bank continues to be on the front lines of the effort against the global financial and economic crisis. Sustained cooperative effort has produced results: the global economy is stabilizing and is now in recovery mode because of the extraordinary and coordinated actions that governments and international financial institutions, including the World Bank, have taken to protect against the economic shocks that we have experienced.
Canada has weathered the crisis well. Our experience now provides an example to others as they take the bold steps necessary to strengthen public finances and financial systems. These countries are now turning the corner towards economic recovery. The global recovery continues to be fragile, however, and we must recognize the benefits of coordination and cooperation, and continue down this path.
We must also recognize that some regions, including the Caribbean, continue to grapple with the negative impact of the global crisis. We must work to ensure that recovery is balanced and shared by developed and developing nations alike. When they met in Toronto earlier this year, Group of Twenty (G-20) Leaders committed to create the conditions necessary to achieve strong, sustainable and balanced growth.
There are still other regions that have had the misfortune this year of having crisis compounded upon crisis. Natural disasters afflicting the people of Haiti and Pakistan continue to occupy our minds and our efforts. We wish to express our gratitude to the World Bank for its timely and well-planned interventions to assist with reconstruction efforts, and recognize that, while much work has been done, it will be many years and much more effort before lives are returned to anything approaching normality in these countries.
Focusing on the Millennium Development Goals (MDGs)
As Prime Minister Stephen Harper noted in his address to the United Nations last month, Canada has clearly demonstrated its resolve to achieve the MDGs. We have already doubled our aid to Africa. We are on track to double our international assistance, to a total of $5 billion this year. We untied our food aid in 2008 and will untie all of our aid by 2012–13. At this year’s G-8 Leaders Summit, Canada championed—and Leaders agreed to enact—the Muskoka Initiative on Maternal, Newborn and Child Health, which will do much to accelerate progress on MDGs 4 and 5 through cost-effective interventions in areas where the least progress has been made to date. Canada has committed $2.85 billion over the next five years towards maternal, newborn and child health.
Hunger is one of the major constraints to accelerating progress across all the MDGs. We would like to acknowledge the leadership of Ireland in highlighting the central importance of eradicating hunger, given its own history of famine and its long-standing role as advocate for the millions of people who suffer its terrible effects.
Another impediment to progress on the MDGs is corruption in the natural resources and extractive industries sectors. These sectors play an increasingly important role in the economies of developing countries and without good governance and institutions, they run the risk of fuelling corruption and conflict. We support the efforts the World Bank Group to prevent and curb illegal activities and corruption in these industries. We welcome recent initiatives of the international community to improve due diligence and create supply chains that do not support trade in conflict minerals. We urge candidate countries to the Extractive Industries Transparency Initiative to complete the implementation process as a mechanism to enhance governance and accountability in the extractive sector.
The recent financial and economic crisis has reinforced our resolve to tackle global issues in a coordinated fashion. On October 8, 2010, I chaired a meeting of the Commonwealth Finance Ministers in Washington. This group of 54 nations, including many of the member states of our constituency at the World Bank, shares a common heritage and desire to cooperate within a framework of common values and goals. At our meeting, we resolved to strengthen this spirit of cooperation by improving collaboration between the Commonwealth and the G-20. This strong spirit of global cooperation gives me confidence that we can continue on the path towards strong, sustainable and balanced growth that benefits even the poorest of our global citizens.
A More Efficient, Effective and Accountable Bank
Over the course of the global financial and economic crisis, the World Bank Group has been instrumental in the re-establishment of global stability by delivering on record levels of lending to compensate for diminished levels of private sector capital. Shareholders of the Bank have supported this response through recapitalization, ensuring that the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC) together have a sufficient capital base to increase annual lending from pre-crisis levels by over 80 per cent, to US$32 billion.
When the global community agreed to this program of recapitalization at the Spring Meetings in April 2010 and at the G-20 Leaders Summit in Toronto, we required the World Bank to implement reforms that would usher in renewed confidence in the development results attained from our recapitalization investments. We must now ensure that these reforms are implemented in a way that builds confidence in the global financial infrastructure, including the World Bank, and the resiliency of the countries that the World Bank supports.
Management must continue to press towards efficiency, effectiveness, legitimacy and accountability of the World Bank Group and ensure it remains client-focused.
This year, the World Bank has made changes to the Annual Meetings that will result in enhanced accountability and shareholder stewardship. This is in response to our requests, as Governors, to strengthen accountability and oversight and demonstrates that the new governance culture is gaining momentum.
Beginning with the elections that concluded yesterday, we will have a third chair for Africa at the Board of Directors. This important development captures the essence of the discussions on balanced and equitable representation in the governance of this institution.
Durable reform is a gradual process that takes time, and one on which we must remain focused. The Board of Directors is advancing a challenging agenda to strengthen the internal governance architecture of the World Bank. We look forward to seeing measurable and concrete results as this reform agenda advances, including receiving a breadth of well-formulated and actionable options from the Working Groups on President Selection and Dual Evaluation of the Board and Management in advance of our next meeting in spring 2011.
Our Commitment to the Global Community
As the Bank makes progress on its commitment to improve its own efficiency, effectiveness and accountability, we also bear responsibility as shareholders and donors to continue to do our part. This responsibility extends beyond providing financial support as required, and includes a continual push for measurable results.
Our commitment to results includes encouraging greater involvement and innovation from the private sector in international development as a critical engine of growth and poverty reduction. Canada is pleased to partner with the World Bank Group on a number of initiatives designed to leverage private sector investment for development:
The IFC plays an important role in supporting private sector development. We must continually ensure that the growth of these taxpayer-subsidized institutions does not crowd out a return of private sector investment in emerging markets. The IFC should continue its push into low-income countries and frontier markets: places where growth is constrained by an abundance of risk and an undersupply of private capital. With the IFC’s anticipated growth over the coming decade will come additional net income that should be used, in part, to further bolster the financial capacity of the International Development Association (IDA) without jeopardizing the long-run financial stability of the IFC.
The World Bank’s Multilateral Investment Guarantee Agency (MIGA) has adopted changes to its convention to provide greater flexibility and scope to do more business and generate greater development impact—changes that will be instrumental in ensuring the agency’s relevance going forward. MIGA’s political risk insurance products are important for promoting foreign direct investment into developing countries.
We will support an ambitious replenishment of IDA this fall. As in past replenishment cycles, Canada and Ireland are prepared to provide a meaningful level of assistance to those low-income countries around the world that have had to work additionally hard to protect their vulnerable populations and continue to face significant hardship as a result of the global economic crisis. This replenishment, like capital increases at the IBRD, must be matched with a rigorous focus on results.
We support IDA’s efforts to recover funds from countries that no longer require the preferential rates that IDA offers, so that IDA credits can be redirected towards their most efficient and effective use: the low-income countries that IDA targets.
Already we have reached agreement to make important changes that recognize the unique challenges faced by fragile, post-conflict and small states, which will result in greater investment in these categories of countries. It is becoming increasingly clear, as well, that a key prerequisite to sustained development is good governance and strong institutions that protect and promote human rights and facilitate desired development outcomes.
Also under discussion is the creation of a Crisis Response Window. We can all recognize the importance of creating institutional capacity to respond to future crises, but this must be done in a pragmatic way, with clear criteria and parameters, ensuring that donors can have confidence that important development assistance is being put to effective use.
We can point to several development success stories: countries that have experienced sustainable growth and are now transitioning from recipient to contributor in a way that was unknown 20 years ago. Accepting responsibility for international obligations is an outcome that is to be celebrated where it has occurred, and encouraged where it has yet to occur. Our continual and ongoing efforts to achieve strong, sustainable and balanced growth are what mark the global cooperation that has been strengthened over the past two years.