of the International Monetary Fund
on Financing For Development
I would like to join in giving thanks
to President Fox, for hosting this Conference on Financing for Development.
And I would also salute the leadership of Kofi Annan, who has been a constant
source of wise advice and friendship.
Mr. President, ladies and gentlemen,
this conference should become a milestone in the fight against world poverty.
I do think it is possible to achieve the Millennium Development Goals.
The IMF is deeply committed to playing an active part in this effort. It
is an honor to share my vision of the IMF's role, and to seek your input
I welcome the intensive and critical
debate about globalization. We need to work for a better globalization--one
that provides opportunities for all, and one in which risks are contained.
But let us not confuse ourselves--integration into the global economy is
good for growth, and growth is essential for fighting poverty. The world
needs more integration, not less. But it also needs stronger international
cooperation, to guide and shape the process of globalization. We must do
our utmost to ensure that people at the local level understand this process,
are engaged, and have the means to take advantage of its opportunities.
We need to build bridges through dialogue, cooperation, and inclusion,
to create a sense of global ethics. And the interactions between people
and nations must respect human rights, while recognizing personal and social
I am encouraged that there is an
unprecedented degree of agreement about what is required to overcome world
poverty. The Monterrey Consensus defines the right priorities. It makes
clear that nothing will work without good governance, respect for the rule
of law, and policies and institutions which unlock the creative energies
of the people and promote investment-including foreign direct investment.
It also recognizes that when poor countries are ready to live up to these
responsibilities, the international community should provide faster, stronger,
and more comprehensive support. I see four priorities for that support:
Trade is the most important avenue
for self-help. It generates income and reduces aid dependency in poor countries,
and creates a win-win situation for all. We must work ambitiously to open
markets and phase out trade-distorting subsidies in the industrial countries,
and to reduce barriers to trade among developing countries. I share Mike
Moore's appeal that Doha should be the start of a true "Development Round."
Second, the international community
should stick to the target of 0.7 percent of GNP for official development
assistance. And it should also stick to the principle of channeling support
through budget laws, because this is the most transparent, accountable,
and concrete expression of solidarity. The commitment by the EU to raise
ODA to an average of 0.39 percent of GNP by 2006, and the recent proposal
by President Bush, are significant steps forward. I am confident that even
stronger support will be possible if the public understands aid even better
as an investment in peace, stability, and shared prosperity, and--equally
important--if poor countries demonstrate that they are putting aid to good
Debt relief is another essential element
in a comprehensive effort to fight poverty. The IMF and World Bank are
working hard to make the enhanced HIPC Initiative a success. But in all
our work on debt relief, we should not forget that the ability to lend
and borrow is an important element of financing for development, and trust
that contracts will be honored is essential for a modern economy and a
stable international financial system. I would challenge civil society
organizations, to devote as much energy and attention to a worldwide campaign
to increase aid and trading opportunities for poor countries as they have
to the successful effort on debt relief.
Finally, we have to recognize that slow
progress in the reforms needed to fight poverty often reflects lack of
institutional capacity, rather than lack of political will. Our response
should be to pay even more attention to capacity building in our work with
poor countries. This is why the IMF recently opened regional technical
assistance centers in the Pacific and the Caribbean. And this is why I
have proposed to set up regional centers in Africa in the Fund's core areas
of responsibility, as part of our support for the New Partnership for Africa's
The IMF itself is in a process
of reform, learning from experience and driven by our desire to make globalization
work for the benefit of all.
We recently completed a thorough review
of the Poverty Reduction Strategy Paper (PRSP) process, pioneered two years
ago by the IMF and World Bank, and the IMF's Poverty Reduction and Growth
Facility (PRGF). Our worldwide outreach, including the UN and civil society,
has confirmed that the PRSP process is a promising approach for tackling
poverty systematically. Why?
We are making the IMF transparent, and
advocating transparency for our member countries.
Knowing that financial crises can undo
years of economic and social progress, we are concentrating more than ever
on crisis prevention.
We are actively promoting rules of the
game for the global economy, through our work on standards and codes.
We are helping our members to strengthen
their domestic financial sectors, and to combat money laundering and the
financing of terrorism.
In our work on international capital
markets, we are looking equally at risks in emerging markets, and risks
coming from the advanced countries.
We are trying to define more clearly
the roles of the IMF and private creditors in financial crises. I believe
it is essential to be able to resolve unsustainable debt situations in
a more orderly, faster, and less costly manner. I therefore welcome the
ongoing debate on IMF Management's proposal for a sovereign debt restructuring
We have become more focused on the IMF's
core responsibility for macroeconomic stability-not as an end in itself,
but as a precondition for sustained growth, and because the poor suffer
most from high inflation, unsound public finance, and volatility.
We are also taking steps to focus IMF
conditionality and make room for true national ownership of reform programs.
And we are working in close cooperation
with other international institutions, especially the World Bank and the
broader UN family.
Our reviews showed that there is
room for improvement. We want to make sure that every PRSP and PRGF-supported
program is tailored to the circumstances of individual countries. We will
be working for an open dialogue with stakeholders about the content of
reforms and possible alternatives. We need to pay more attention to the
sources of sustainable growth, and to poverty and social impact analysis.
And donors must better align their assistance with PRSP's, simplify and
harmonize their procedures, and work for a more predictable aid flows.
First, because it is a country-led approach.
Second, because it is a comprehensive,
long-term approach, which integrates the
economic and social perspectives. .
And third, because it aims at broad
consultation and engagement with domestic stakeholders and development
It would be right to adopt the proposed
"Monterrey Consensus" as an outcome of this conference. Beyond Monterrey,
must transform this consensus into concrete action, with a sense of
urgency. And we need to develop a comprehensive and transparent system
to monitor progress toward the Millennium Development Goals. As part
of this process, we should identify more clearly the respective responsibilities
of poor countries and their development partners-donor countries, international
institutions, the private sector, and civil society. On this basis we can
establish better accountability. I would have no hesitation in subjecting
the IMF to the scrutiny of such a monitoring system, provided that it did
not produce bureaucracy and would apply equally to all the parties involved.
Mr. President, ladies and gentlemen,
with a concerted effort, I am optimistic that we can achieve the goals
we have set. The global economy appears to be in a process of recovery.
The United States has demonstrated
leadership through timely policy action to minimize the risk of a more
severe downturn. And I am confident that developing countries will benefit.
The resilience of the global economy and financial system shows that the
initiatives to strengthen the international financial architecture are
beginning to pay off. The implementation of the Monterrey Consensus should
be a next chapter in our efforts to create a better world.
Statements at the Conference