The previous meeting of our Committee, held on October 5, 1998, provided an opportunity to assess the consequences of, and draw the necessary lessons from, the financial crisis triggered in South-East Asia 15 months earlier.
The subject has remained under consideration since then as various regional and multilateral forums and bodies have sought to identify the most appropriate ways to halt the current crisis and prevent similar new ones from occurring.
This process has clearly moved forward, and initiatives have been proposed to restore global economic stability on the basis of greater international solidarity founded on principles of sound management at all levels with the ultimate objective of ensuring sustainable growth and irreversible reduction of poverty.
This approach is inescapable, given the globalization of markets, the increased interdependence of national economies, and the interrelation between the real and financial spheres.
The success of this approach requires a shared strategic commitment at the international level to marshal the efforts of governments, multilateral institutions, and private operators.
It is important to recognize that even though fears of a widespread recession have now subsided, the crisis has not been halted completely, and it will be some time before its negative impact on most emerging countries and on the global economy has been overcome completely.
Increased poverty among the most vulnerable segments of society and higher unemployment in some affected countries are two factors that make it more essential than ever to refocus our policies and strategies on individual welfare and on social development.
This refocusing effort is now a necessity, not an option, for two key reasons: First, growth, no matter how strong, will prove truly sustainable only if its benefits are distributed equitably and if it enhances the well-being of the entire population and reduces insecurity and sources of vulnerability. This approach is crucial for an increase in the capacity of countries to withstand external shocks, including those generated by contagion, a danger from which no country is completely immune. Second, macroeconomic balance must not be an end in itself, but rather a tool for promoting social development and improving the well-being of the population.
These principles should guide the efforts of governments, multilateral financial institutions, and other donors within a strategic partnership.
In this regard, the initiative taken by the World Bank in organizing a new framework for cooperation with its member countries, namely the Comprehensive Development Framework, merits encouragement - to the extent that it allows macroeconomic, social, structural, and human issues to be addressed simultaneously.
This Comprehensive Development Framework is not yet in its final form, but, in my view, it should be founded on three fundamental principles: First, it should fit within the priorities and programs of the country concerned, so as to increase its chances of implementation and its impact. Second, it should have enough flexibility and adaptability to accommodate the wide range of countries, situations, and development levels. Third, the resources to finance the establishment of the Comprehensive Development Framework should be mobilized on appropriate terms and conditions. Our wish in this regard is to see the World Bank play a major role as a catalyst in attracting concessional resources to be made available through the Framework.
A similar display of international solidarity is also needed to support post-conflict countries. The proposals currently being examined by the World Bank for broadening the concept of post-conflict countries are to be encouraged.
Also to be encouraged are the recent proposals for expanding the scope of the HIPC initiative, soften the eligibility criteria, and shorten the period elapsing before eligible countries can benefit from this initiative.
Since such improvements will clearly add to the cost of the initiative, a consensus similar to what has been achieved in restructuring of the initiative is needed with regard to its financing. International solidarity is key, not only to ensuring that the initiative is funded, but also to alleviating the burden on multilateral financial institutions, including the African Development Bank.
I do not wish to conclude these remarks without appealing to the international community to reflect on ways to alleviate the debt burden of middle-income countries. I would urge the community, when doing so, to take into consideration not only the per capita GDP levels of these countries, but also their social development needs.
Finally, I would like to point out that it is of primary importance not only to safeguard the financial structure and viability of the World Bank, but also to reinforce them. If this is to be done, the Bank must refocus its attention on its key mission, which is to promote sustainable development.
At the same time, the question of the Bank's capital adequacy must be reviewed if the institution is to carry out its mission successfully. Any delay in this regard should not translate into an increase in costs to borrower countries.