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Statement by Japan, at the 61st WB/IMF Development Committee (Washington, D.C. / Apr. 17, 2000)

Statement by Haruhiko Kuroda,
Vice Minister of Finance for International Affairs
Japan
At the 61st Meeting of the World Bank/IMF
Joint Development Committee
April 17, 2000

 

Intensifying Action Against HIV/AIDS

It has been just 20 years since HIV/AIDS began to be recognized. HIV infection has spread all over the world -- to date about 50 million individuals have become infected, and 16 million have already perished worldwide. HIV infection is concentrated in developing countries, over 95% of all cases, where there is a vicious cycle that poverty and disparities of income place people at high risk for infection, and HIV infection, in turn, exacerbates poverty. The rapid changes in society that accompany economic growth as well as the gender issues are also factors contributing to the spread of HIV infection in developing countries.

HIV/AIDS has a serious social and economic influence. It damages households and macro economies from the reduction in life expectancy, affects the social systems by altering the demographic structure, and increases fiscal costs. HIV/AIDS is a global-scale issue, and it is an urgent issue for the international community to respond to the accelerating spread of the infection. Japan has identified HIV/AIDS as one of the priority areas in its mid-term ODA policy, announced the Global Issues Initiative on Population and AIDS (GII) in 1994, and has already provided a total of USD 88 million in ODA to combat AIDS, including over USD 23 million in contributions to UNAIDS since 1996.

In tackling the HIV/AIDS problem, in addition to the effort by developing countries themselves, coordinated action is important among civil society, multilateral and bilateral donors, and the private sector, according to respective comparative advantage. We also need to recognize that HIV spreads extremely fast in Asia. Even to those countries where the rapid spread of HIV has been prevented and to those that are in the initial stages of the epidemic, sufficient consideration must be given and strategies responding to the condition in each country are required. Additionally, there are a number of serious infectious diseases aside from HIV/AIDS, such as tuberculosis and malaria, in developing countries, and we need to recognize them as important development challenges as well.

Trade, Development and Poverty Reduction

While economic transactions over national boundaries are flourishing, the gap is expanding between those countries taking advantage of globalization and increasing their efficiency and productivity and those lagging behind - many developing countries in particular the least developed countries. Trade is playing a more and more critical role in achieving effective development, poverty reduction and sustainable economic growth. From this perspective, Japan expects that the developing countries will be active partners in the next round of comprehensive WTO negotiations, which aims to improve market access and strengthen trade rules for the new century, so that they can effectively use the international trading system to promote economic growth and reduce poverty. 

At the same time, it is an important agenda to build capacity and institutions in developing countries in order to enable them to actively participate in the international trading system and to come to economic growth and poverty reduction. To these ends, trade needs to be integrated into the comprehensive poverty reduction strategies with an aim to implement trade reforms and to establish safety nets with due consideration to the situation of each developing country. It is important for the World Bank, based on its operational experiences, to support developing countries in cooperation with other international organizations, while clearly identifying its role in this field and avoiding duplication with the activities of other international organizations. 

Progress of the Enhanced HIPC Initiative and PRSP

I welcome the progress achieved in the enhanced HIPC Initiative. To date, five countries - Uganda, Mauritania, Bolivia, Tanzania, and Mozambique - have reached their Decision Points under the enhanced framework.

Nevertheless, the international community -- bilateral and multilateral creditors as well as HIPCs -- is required to make further efforts to accelerate the implementation of the enhanced HIPC Initiative, in response to the strong expectations that as many countries as possible should reach their Decision Points by the end of 2000. Under the enhanced Initiative, Japan is to provide the greatest debt relief on bilateral ODA claims and also has supported multilateral institutions by contributing to the HIPC Trust Fund and the IMF PRGF-HIPC Trust Fund. In addition to these measures, Japan recently announced the following new contributions:

  • Firstly, Japan will make a contribution to the HIPC Trust Fund up to USD 200 million in total, including USD 10 million which has already been paid in. 
  • Secondly, Japan will increase to 100% its debt relief on non-ODA claims under the framework of the Paris Club.
  • Thirdly, Japan will continue to be committed to supporting HIPCs through various assistance measures including further provision of grant assistance. 

More efforts including the following measures are needed for the speedy implementation of the enhanced Initiative. 

  • More bilateral contributions and maximization of utilization of the MDB's internal resources in a timely manner in order to ensure the financing for the debt relief under the enhanced Initiative. 
  • Accelerating the work on PRSP to be developed by HIPCs, with the cooperation of the World Bank and the IMF as well as with the participation of the civil society, donors, and other development partners in order to ensure the link between debt relief and poverty reduction.

Role of the World Bank

Reflecting the structural changes of the world economy in many aspects, the environment surrounding development assistance is also changing. It is important to put the World Bank under constant review. The World Bank is to continue to provide a broad support to the poor countries including institutional and human capital building and economic/social infrastructure. For countries with access to private capital and with sufficient foreign exchange reserves, the Bank's lending strategy should be more selective, focusing on extending loans in the environmental and social sectors and urging them to actively engage in economic/social reforms. 

Since 1997, the World Bank has been decentralizing substantially its decision making authority and staff presence. While the relation with borrowing countries has been improving under this process, there are growing concerns over the cost implication of decentralization, and over excessive decentralization which might damage the integration of the Bank as a global institution. It is now time to review the costs and benefits of decentralization for the Bank's future strategy. 

IFC, the private sector arm of the World Bank Group, needs to focus more on development impact in its operation so as not to compete and supplant private capital. For its future private sector strategy, the adequacy of the present capital, organization, and staffing is to be subject to comprehensive review.