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Statement by Japan, at the 64th WB/IMF Development Committee (Ottawa, Canada / Nov. 18, 2001)


Statement by Hidehisa Otsuji, Senior Vice Minister of Finance, Japan
At the 64th Meeting of the World Bank/IMF 
Joint Development Committee
Ottawa, November 18, 2001


Impact of Recent Events and Response of the World Bank Group
The events of September 11th reminded us of the importance of addressing development issues. At the same time, they also made us realize how daunting is the mission of the World Bank to fight against poverty. 
It is not just the industrial economies that have felt the impact. The events have also started adversely affecting the developing economies through increased risk aversion in international capital markets, reduced tourism revenues, and other factors.
To cope with these difficulties, it is essential for International Financial Institutions, particularly the World Bank and the International Monetary Fund, to demonstrate strong leadership. Therefore, I believe it is extremely significant and timely for us to discuss this subject at this Joint Development Committee.
The World Bank is expected to provide developing countries with support lest their poverty reduction efforts be thwarted by the aftermath of recent events, such as social unrest associated with conflict. We encourage the World Bank to fully support affected countries, particularly those in South, Central, and Southeast Asia.
As for the private sectors in developing economies affected by the recent instability in capital markets, I recognize the increasing importance of support from IFC and MIGA.
That said, however, the resources and capacity of the World Bank Group are certainly not limitless. Accordingly, it is essential for the World Bank Group to collaborate even more closely with other international institutions and bilateral aid organizations, while taking into account their respective expertise. 
For effective collaboration among IFIs, in particular, due consideration must be given to each institution's primary role: the medium- to long-term development agenda of the World Bank; the response of the IMF to short-term financial shocks; and the foci of regional development banks such as the Asian Development Bank.
With regard to post-conflict reconstruction in Afghanistan that has become an urgent priority, the United States and Japan will co-host the "Senior Official Meeting on Reconstruction Assistance to Afghanistan" on November 20th in Washington D.C. We think it imperative that, given these circumstances, donor countries and international organizations enhance their collaboration. In this regard, the participation of the ADB, as the regional development bank, is particularly important, and thus the World Bank should closely cooperate with the ADB. 
I would also like to announce that Japan has decided to contribute an additional one billion US dollars to the Poverty Reduction Growth Facility so that the IMF can respond in a timely and adequate manner to short-term difficulties that the poorest countries may have to overcome.
United Nations Conference on Financing for Development
The International Conference on Financing for Development in March next year will provide a good opportunity for us to discuss a broad range of the development agenda, and achieve the millennium development goals.
To make the most of this opportunity, we must all participate in the discussion with a sense of balance. While recognizing the importance of the efforts of industrial economies, continued and strengthened policy efforts of developing economies are indispensable. It is evident from the experience of the World Bank and IMF that both good governance and sound policy actions, coupled with strong ownership of developing countries, are crucial for sustainable growth and poverty reduction. This, I believe, should be our key message to be delivered to the Conference on Financing for Development. 
In this context, I welcome the recent progress made in the Poverty Reduction Strategy Paper approach. The whole idea that governments prepare PRSPs through a country-driven participatory process involving civil societies and other stakeholders seems to have started taking root in developing countries. The upcoming Conference will be a good opportunity to share the significance of PRSPs with UN organizations.
It is commendable that the World Bank and IMF have, through strenuous dialogue with UN organizations, introduced various measures in order to increase their operational accountability and accomplished their objectives. I believe that the pragmatic approach of making the most of existing frameworks, rather than creating new ones, is the most effective and useful way to address the issue of global governance in development.
Heavily Indebted Poor Countries and PRSP
Under the Enhanced HIPC Initiative, a total of 24 countries have reached decision points thus far and three countries have reached their completion points. 
While I welcome steady progress in efforts towards poverty reduction, I would like to point out that debt relief is not a panacea for poverty reduction or economic development. -From the medium- to long-term development perspective, I believe it is essential to implement a comprehensive approach to development -one that is country-driven and focuses on the promotion of private investments and the diversification of exports with strong ownership and self-effort of the low-income countries.
Harmonization of Operational Policies and Procedures
I share the view that the harmonization of operational policies and procedures by multilateral development banks is an important challenge to enhancing development effectiveness, increasing efficiency, and reducing administrative burdens and costs for recipient countries. In promoting harmonization among the multilateral banks, it is essential to respect the ownership of developing countries and the work of bilateral donors.
With regard to the work that has been done in response to the last Development Committee Communiqué, I welcome the report that the first stage of the work focusing on situation analysis is nearly complete. Of all the findings, I believe that the analyses of why aid procedures differ by institutions are beneficial. 
Regarding the second stage and thereafter, discussion must be carried on, while taking into account the complex and sensitive nature of the issues that will emerge. Let me also add that the World Bank's decision to review its procedures in the areas of procurement and financial management, in cooperation with aid partners, certainly deserves our attention.
Education for All
Investing in human resources such as education is the key to reducing poverty and achieving sustainable growth, particularly in the -medium to long term. In this regard, we need to pay attention not only to primary education enrollment but also to the quality of education including the completion rate and learning achievement. In addition to developing the primary education system, we also need to address post-primary education issues such as adult illiteracy, while taking into account the needs of each country. Furthermore, eliminating gender disparities in education is one of the top priorities and requires continuous efforts. 
In this area, both strong commitments by developing countries and donor supports are critical. In order to realize Education for All effectively and efficiently, we need to promote collaboration and cooperation among a number of the institutions engaged, while fully valuing their expertise. While we note that UNESCO has started a new drive to promote basic education, the World Bank is considered to have a comparative advantage amongst other institutions, including UNESCO, UNICEF, and UNDP, in building educational infrastructure. Thus, we expect the World Bank to address the issue from a broader perspective while utilizing their expertise. I look forward to a practical action plan, prepared through discussions with major partners, to be submitted at the next Development Committee meeting.
Further Contributions by Japan to World Bank Initiatives
In order to help developing countries address medium- to long-term challenges, we have supported the World Bank through contributions to the Policy and Human Resources Development Fund and the Japan Social Development Fund. -In addition to these contributions, we have decided to contribute to the Critical Ecosystem Partnership Fund as well as the Development Gateway Initiative, as we recognize the importance of environmental considerations and the advancement of information technology in the context of global issues.
Thank you.