86987 DEVELOPMENT COMMITTEE (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries) EIGHTY-NINTH MEETING WASHINGTON, D.C. – APRIL 12, 2014 DC/S/2014-0025 April 12, 2014 Statement by Mr. Guido Mantega Minister of Finance Brazil On behalf of Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, and Trinidad and Tobago Statement by Mr. Guido Mantega Minister of Finance Brazil on behalf of Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname and Trinidad and Tobago 89th Meeting of the Development Committee April 12, 2014 Washington, D.C. More than five years have passed since the eruption of the world economic crisis in 2008. Although most advanced economies have recently been performing better than in 2011 and 2012, growth rates are still below the ones achieved in the pre-crisis period, and risks remain on the downside. Furthermore, unemployment continues to be a matter of deep concern in many regions of the world. A stronger and more balanced growth of advanced economies is a sine qua non condition for world development, but it should not come at the expense of the stability of international financial markets and capital flows. Shifts of monetary policies in countries that issue reserve currencies have well-known adverse impacts on the world economy, including on emerging markets. Against this scenario, we welcome the document prepared by staff of the World Bank Group for this meeting (“Growth in the Post-Crisis Global Economy: Policy Changes for Developing Countries”). We are especially satisfied with its call for attention to the need for appropriate coordination and communication of macroeconomic policies in a transition period. We believe international financial institutions are appropriate fora for improving economic coordination and communication. The adoption by the World Bank of the twin goals of ending extreme poverty and promoting shared prosperity in our last meeting was most welcome. The countries of our constituency have been focused on similar targets, with successful results. In Brazil, for instance, the adoption of economic and social policies, such as the conditional cash transfer, has resulted in a sharp decrease of poor people from 35.7% in 2003 to 16.0% in 2012. In the same period, almost 18 million formal jobs were created and unemployment rates are currently below 5% of the economically active population. Our constituency and the World Bank have, therefore, many experiences to be shared in the coming years. We thank the WBG support in this path, and urge it to continue to be the multilateral platform for all regions in their paths of inclusive development. In this sense, the Brazilian-World Bank partnership through the creation of a knowledge hub in Brazil is serving as an important facilitating platform for knowledge sharing. Sustainable increases in welfare bring about new challenges. Infrastructure is a particular matter of interest. Reducing poverty and sharing prosperity implies stronger demand for airports, railways, water supply, energy, and international trade, among others. Developing countries need to enhance infrastructure investments and therefore they need well-structured projects and appropriate long-term finance. The World Bank presents the instruments to play a greater role in that respect, provided that recipient countries can exercise ownership and play the most important role in choosing priorities and designing policies. We welcome the evolution of the concept of the Global Infrastructure Facility that is currently under discussion. Other particular areas the WBG can play important roles are South-South cooperation, especially in the area of technological transfer, as well as the leverage of private funds. We urge the Group to continue developing ways to engage even more in these areas and support countries in their exchange of experiences. We welcome the update on the implementation of the Sendai report and congratulate the WBG for the results achieved in disaster risk management. This is an issue with direct impacts on the development process. We support the efforts made by the Group to share global knowledge on this topic, as well as to finance projects that can enhance the resilience of countries to both natural disasters and events resulting from climate change. The sharp increase of the number of events and their intensity provoked by climate change creates a harder challenge to the international community, especially in what concerns the smallest and most vulnerable countries. We are particularly grateful to the response of the WBG to the Philippines in the aftermath of Typhoon Yolanda. The Group responded quickly to requests by the Government of the Philippines and approved a comprehensive recovery and reconstruction support package to alleviate the adverse impacts of the devastation suffered by the country. We take note of the measures approved to increase the lending capacity of the Bank. The further differentiation of pricing, based on maturity and the increase of the single borrower limit (SBL), however, cannot be seen as the solution for solving the problems of capital adequacy of the institution. Other measures should be carefully analyzed. Besides, the 50 basis points been charged to SBL-capped countries that go above the previous limit should be considered as their extraordinary contribution to development. We have been carefully following the discussions on the internal reforms. They represent a major step towards a WBG that is more focused on its main goal and more responsive to its borrowing partners’ needs. We welcome the institutional structure changes and hope they will be able to deliver on the proposed objective to increase the flow of knowledge internally, creating faster and more innovative solutions for client countries. As regards the new country engagement model, we strongly believe that it must continue to respect country ownership and the demand driven structure of the institution. The new Country Partnership Framework (CPF) should continue to be a document establishing guidelines for the engagement of the WBG and client countries. It can be informed by strategic country diagnosis but not determined by it: CPFs must become the result of a true partnership between Bank and countries and fundamentally a document owned by both parties. Furthermore, changes cannot disrupt the ongoing operations or much less cause interruptions to the programs. It is also concerning to note that the Bank is dramatically lagging behind in its expected commitments and disbursement in some regions for the current fiscal year. We take note of the current expenditure review and support the notion of increasing the efficiency of expenditures. This, however, cannot be done at the expense of quality of our work. We congratulate the Bank for the successful replenishment of IDA 17, take note of the innovations included in this cycle, and look forward to a successful implementation. Finally, we reiterate our long standing position that no change can be of greater significance for the future role and relevance of this institution than the Voice and Representation reform we have started in 2008. Our agreement then was that the second review of shareholding of this reform would be concluded in October 2015. Given the importance of this reform to our legitimacy, and the complexity involved in such discussions, we call on Executive Directors to start work on the shareholding review agreed by Governors in 2010 to be concluded no later than October 2015. 2