[World Bank] IMF, Bank see progress against poverty

from Marketwatch

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) -- The poorest nations have made progress in eliminating poverty, but the pace must be picked up, international economic leaders said Sunday.
"We see signs of progress toward achieving the goals" established five years ago of cutting the global poverty rate in half by 2015, said Rodrigo de Ratio, managing director of the International Monetary Fund. "We know we need to step up our efforts."

"The progress is encouraging," agreed Paul Wolfowitz, president of the World Bank. See full story on the bank's Global Monitoring Report.

The comments came at the conclusion of a weekend of meetings, where discussions ranged from preventing the next global financial crisis to efforts to bring cleaner energy to the developing world.

Wolfowitz announced a milestone in debt relief, with 17 very poor nations set to have as much as $37 billion in loans forgiven beginning this summer. De Rato won an endorsement for his plan to give the IMF a bigger role in monitoring global imbalances, and on his plan to reform the institution's governance by giving China, India and other fast-growing countries more say.

By all accounts, the global economy is performing well, with growth expected to hit 4.9% this year. See full story on World Economic Outlook.

Storm clouds can be seen, however. For the developed world, it's the problem of trade and capital imbalances. For the developing world, it's the problems of debt relief and poverty reduction. And everyone faces the problems of affordable energy, protectionism and the cancer of corruption. See full story on de Rato's warnings.

A trade dispute between the United States and China moved into the international arena. The U.S.-led Group of Seven nations condemned China for its inflexible foreign exchange policies. See full story on the G7 and related analysis on the ticking time bomb.

Meanwhile, Chinese central bank governor Zhou Xiaochuan said the IMF should monitor the dollar, not the yuan. See full story.

Zhou also strongly defended his nation's gradual pace of currency reform in an interview with MarketWatch.

Wolfowitz said Sunday that improving government is the key to making aid more effective and to reducing corruption.

"We need to focus on building good governance before corruption surfaces," Wolfowitz said. While bribery must be punished, the long-term solution lies in "helping countries build the kind of institutions that prevent corruption in the first place.
The non-government organizations focusing on development and poverty were disappointed in the meetings.

"We want Wolfowitz to fight poverty not just corruption," said Nicolas Guihard of Oxfam International, a global advocacy group.

"The World Bank staff must deliver an action plan to deliver education for all by 2015," said Jamie Drummond, executive director of DATA, a group focusing on debt, AIDS, trade and Africa. "The U.S. government's record in this area is not strong enough."

In his remarks to the World Bank's Development Committee, U.S. Treasury Secretary John Snow applauded the progress made in the past few years in bringing 100 million people above the $1 day poverty line.

In schooling and health care, "the pace of progress has increased," Snow said.
Lenders and creditors must take care not to fall back into a cycle of lend and forgive, now that so much debt has been forgiven, Snow said.

The clearance of unsustainable debt is a critical component of the broader solution, Snow said. "However, it also means we must take care that we don't add to these burdens in the near term."

The challenge to rein in debt is particularly acute now that energy prices have soared. The World Bank said some $300 billion in financing is needed every year to help fund energy projects in the developing world.

The bank is looking at creative financing to ensure that new energy sources are green, with less harm to the environment. One possibility is a venture capital fund to bring promising technologies to reality.

"An extensive array of clean and efficient energy supply and demand technologies exists," the bank said.