Global Policy Forum

In remarks today at a public discussion forum held by the German Bundestag, World Bank President James Wolfensohn called on politicians to help launch a global campaign to meet the international development goal of reducing the proportion of people living in extreme poverty by half by 2015. "Never was there a better time for such a campaign. Knowledge about what sustainable development entails has never been better."

- The budgets of rich countries have never been stronger, said Wolfensohn. "Technology has never been more dynamic. Our goals have never been clearer. We must seize this moment. We must be the first generation to think both as nationals of our countries and as global citizens in an ever shrinking and more connected planet."

Addressing German politicians on "The Challenges of Globalization and the Role of the World Bank," Wolfensohn reiterated his call for rich countries to honor their commitments to devote 0.7 percent of their yearly GDP to overseas aid. "Development assistance is not charity, but a vital investment in global peace and security," he said.

- Current levels of foreign aid, he said, at some 0.24 percent of yearly GDP, fall far short of the 0.7 percent target rich countries promised to meet. The difference between these figures is worth a hundred billion dollars a year. "It is a supreme irony that just at the time when African leaders are putting the right policies in place and are showing results, overseas aid to Africa has fallen from $32 per head in 1990 to $18 a head in 1998. We must reverse that trend."

Outlining the World Bank's agenda in low and middle income countries, and at the global level, Wolfensohn said, "We need to make globalization work for all. Our challenge is to make globalization an instrument of opportunity and inclusion - not of fear and insecurity. We need to help put in place safety nets for the vulnerable, as we are doing around the world, and work with governments to focus on education, health and nutrition. We need to step up the fight against AIDS and malaria and TB, and work with governments to meet their basic infrastructure needs - clean potable water, and sanitation."

Wolfensohn made it clear that the Bank would continue to work in middle income countries. "Eighty percent of the world's poor live in middle income countries. Let there be no mistake, we are not about to turn our back on them." Helping these countries meet their development challenges, he said, is central to the Bank's overarching mission of tackling global poverty.

Wolfensohn called for rich countries to lower their barriers to developing country exports. "I believe that the Bank has a major role to play in working towards a level trading field for developing countries" he said. "We must work to ensure that this next trade round will be a Development Round. Rich countries must get serious on trade. Barriers to developing country exports in industrialized markets continue to severely disadvantage poor countries. Industrialized countries spend more than $300 billion a year on agricultural subsidies. That is roughly equal to the total GNP for all of sub-Saharan Africa. Today tariffs on meat, fruits and vegetables can exceed 100 percent in the developed world. Debt relief without increased market access is a sham."

Wolfensohn said that the Bank was better positioned than ever to work with partners in the fight against poverty. "Over the last few years our development impact - our most important bottom line - has improved dramatically. The quality of our portfolio is at its highest level in two decades-which by itself translates into billions of dollars in more effective development spending for the people we serve."

As measured by the independent Operations Evaluation Department, project effectiveness has gone up from 66 percent in 1996 to 77 percent today - an impressive figure, he said, for an institution whose core business - development - always involves considerable risk. But, he said, the challenges ahead were enormous. "Today half the world's population live on less than $2 a day; 80 percent of the global population has only 20 percent of global GDP; and within each country, there is a massive imbalance between rich and poor. But the challenge does not end there. Over the next 25 years, 2 billion people will be added to the planet, almost all of them in the developing world."

- We will go from a world of 6 billion people, to a world of 8 billion people - with maybe over 6 ½ billion living in the developing world, he said. "How many people will be condemned to live on under $2 a day then? How the international community answers that question will be the key determinant of whether our children will live in a peaceful world or a world of rising conflict" he said.

Outlining the importance of country ownership of reform programs and country-driven development, Wolfensohn said, "We also need to push ahead with streamlining conditionality, focusing more on the outcomes and less on itemizing what steps a government must take to reach them. We know that no amount of conditions can replace domestic commitment to reform." He said that the Bank's new instrument, the Poverty Reduction Support Credit (PRSC), by focusing on programmatic lending, would reduce conditionality.

Sources: Based on World Bank

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