Global Policy Forum

World Bank and IMF Announce Plans to Support Developing Countrie

World Bank
August 20, 2003


World Bank President James D. Wolfensohn and International Monetary Fund Managing Director Horst Kíhler today sent the following letter to Dr. Supachai Panitchpakdi, Director-General of the World Trade Organization (WTO), reiterating the importance of a successful round of multilateral trade talks to developing countries. The letter also reaffirms the two institutions' commitment to help developing countries adjust to a more open trading environment.

For additional information regarding the World Bank's work on trade, please refer to the attached fact sheet.


August 20, 2003

Dear Dr. Supachai,

We strongly believe that a successful conclusion of the Doha round is essential for the world economy and will benefit all countries. A successful WTO round can also contribute significantly towards efforts by the international community to meet the Millennium Development Goals. Overall, developing countries have much to gain from a more open multilateral trading system. At the same time, we appreciate that adjusting to a more liberal trade environment may impose costs on some of our member countries—albeit temporarily—as a result of preference erosion, the loss of tariff revenue or other factors.

We are therefore working to package our support, building on what we are already doing, in order to help countries to implement commitments they make as the Doha Development Agenda proceeds.

We already have a variety of instruments to meet developing countries' concerns about the impact of trade liberalization, and we are actively exploring ways to assist countries that request our help. While important aspects of our plan for targeting Doha-related needs are still under consideration, it will have three dimensions:


  • First, we can work closely with our members to assess the nature and magnitude of any adjustment need.


  • Second, we will assist in designing policies, institutional reform and investment programs aimed at addressing key obstacles to trade expansion and at managing the impact on affected population groups.


  • Third, we are examining ways to use and tailor our lending authority to respond to the specific challenges posed by the Doha Development Agenda. Such lending could take place at the project, sector, and country levels. In the context of coherent country financing plans, we also aim to provide support in mobilizing donor resources. Grants authorized under IDA13 could also be used, subject to the agreed guidelines.

    As we emphasized last May at the WTO General Council meeting, we remain fully committed to helping ensure successful completion of the Doha development round. Given the substantial promise for the world's poor we should work together to address the short-term adjustment problems. As you embark on the crucial WTO Ministerial meetings in Cancún, we would like to assure you that both our institutions stand ready to support our members in taking full advantage of these opportunities.

    As we move over the coming weeks to put in place the various elements of our Doha-related efforts, we look forward to continued engagement with you on these issues.

    Sincerely yours,

    Horst Kíhler, James D. Wolfensohn

    The World Bank's Work on Trade

    On average, the two billion poor people living on $2 a day or less face double the trade barriers of rich people. The average European cow receives a $2 a day government subsidy.
    The World Bank, as part of its poverty-reduction strategy, is in the process of launching 80 trade facilitation projects in developing countries worth US$4.6 billion.

    International trade can be a key to cutting poverty - providing jobs and driving economic growth for a developing country. Countries that have entered export markets through trade and intensified their links with the global economy have tended to grow faster than those that have not.

    Unfortunately many developing countries have faced major hurdles in realizing the potential gains offered by trade. Poor roads and rail, government policies which failed to promote investment and economic certainty, and sometimes even geography have hindered them. In addition, even as many of these governments have stepped up efforts to address these shortcomings, many have found themselves locked out of lucrative rich-country markets by high tariffs on the agricultural and manufactured goods they seek to sell.

    The Bank's Work on Trade:
    The World Bank works at both a global level to advocate trade reform and at a country level to help developing countries take advantage of new markets, as part of its wider poverty-reduction strategy. An upcoming Bank report will outline the benefits that would flow to developing countries and the world's poor from a liberalization of international trade. Senior Bank officials, including President James Wolfensohn, use major international forums to promote the importance of the Doha round to low-income countries, and Senior Bank officials engage in talks with trade negotiators from developing and developed countries.

    At the country level, programs have been devised to improve the developing countries' ability to trade on international markets. Many low-income countries have been hindered in their efforts to integrate into the global economy by poor policies and facilities. The bank is working with governments to strengthen these areas, particularly infrastructure, services, financial systems and other sectors of the economy essential to advancing trade and development. Comprehensive studies on how to increase trade have been launched in 20 low-income countries in the past two years. The Bank is in the process of launching 80 trade facilitation projects worth US$4.6 billion.

    The Bank has developed the Integrated Framework for Trade-related Technical Assistance for Least Developed Countries to improve the incorporation of trade into poverty reduction strategies. The bank has contributed US$1.5 million to a trust fund, which is a joint venture with five other countries, to support the process. The aim is to help countries integrate trade into their poverty reduction strategies. Under the integrated framework, a study is produced which identifies areas where technical assistance or investment will enhance the country's trade capacity. Recommendations from the studies are submitted to aid donors for potential financing and incorporated into Bank lending operations.

    Through the World Bank Institute, often in partnership with developing country think tanks and teaching institutions, the Bank conducts trade training programs for a variety of audiences. The Bank also supports developing country participation in the World Trade Organization and membership of regional trading agreements, and provides analysis and support to regional groupings in Africa, Latin America and Asia.


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