[Recorded by Electronic Apparatus]
Tuesday, October 22, 1996
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[English]
The Chairman: Good morning, colleagues. Welcome to the first meeting of the finance committee's Sub-Committee on International Financial Institutions.
We are pleased to welcome to this first meeting, very appropriately, Mr. Len Good, who is Canada's executive director at the World Bank in Washington, which of course is where the World Bank is headquartered. A couple of his staff are with him today.
If at any time you want to invite them to participate, please feel free, Mr. Good.
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I've discussed with some members where I think we could be going with our subcommittee, but as to what we can do on the first day, we just had the annual meeting of the World Bank a couple of weeks ago in Washington, so it seemed most appropriate to have Mr. Good bring us up to date on what is happening at the World Bank, particularly under the leadership of the new president,Mr. James Wolfensohn. There are some really interesting things happening.
Mr. Good, perhaps you could spend some time bringing us up to speed and then we will have questions from our colleagues.
Later on in the meeting I would like to open the subject of where it would be appropriate for us to go, in view of the annual report and the good intentions of the new president at the World Bank, to help the bank at the beginning of its second 50 years, it having achieved its first 50 years quite recently.
Our clerk is Martine Bresson and our researcher today is Anthony Chapman.
Without any further ado, I call upon Mr. Good to help us get started with this very important work.
Mr. Len Good (Executive Director, The World Bank Group): Thank you very much. I really am pleased to be here. I'm always pleased when people take an interest in the institution I'm working for, because it is an important institution and it's doing some important work.
It's also a very complex institution. It's a very complex business, the whole business of development. For that reason, if you don't mind - but cut me off if I'm going down a track you don't want to go down; I'm prepared to go in any direction - I thought I would tell you a little bit about who I am in the sense of what my job is and what I do at the bank.
Then what I wanted to do, if it's of any interest to you - and I think it has some importance - is talk a little bit about the history of both the IMF and the World Bank over the last 50 years. It won't be too long, but I'd just like to set the stage for understanding where the bank is now and the direction it's going in, because without a bit of an understanding of the past couple of decades - which I can do briefly - it's hard to know where it will be going in the future.
Mr. Grubel (Capilano - Howe Sound): May I interrupt for one second?
Mr. Good: Certainly.
Mr. Grubel: I want to know what the instructions are from the Department of Finance as to why these meetings are being held. What are we expected to come up with? I think that should influence the topic.
The Chairman: Mr. Grubel, I have some ideas about where we should go as a committee, and I've discussed them with you, but I thought it would be most appropriate, for the benefit of members who, unlike you, don't have as much familiarity with the World Bank, to have an overview. Then as we progress down this road this morning -
Mr. Grubel: What do you expect to come out of this after the next ten years of holding hearings like this?
The Chairman: Were you at the meeting when we had Mr. Wolfensohn here last May or June? Herb, you were here? Okay.
Clearly the new president has set some objectives to help the bank to adapt in its next 50 years. Canada is an important partner in the World Bank and the IMF, of course. To the extent that Canadian parliamentarians, on behalf of our citizens, our voters and the government, can promote that improvement in cooperation with Mr. Wolfensohn and through our executive director....
To put it in general philosophical terms, as Canadian parliamentarians, we should help as best we can to provide the political weight towards positive change at the World Bank. I can't predict what our first report will look like, but it will certainly be a positive statement of support for a good change at the World Bank.
Is that fair, Herb?
Mr. Grubel: Thank you. I just wasn't aware. I thought most of the time committees get their marching orders from the Department of Finance.
The Chairman: Oh, not this one.
An hon. member: Herb -
Mr. Grubel: No, listen. Marching orders in the sense that we are told the department would like to have an investigation of an issue, such as trusts, the budget, or various other topics we have had under discussion, and a certain frame of reference is given and sets of questions are asked. I had forgotten about the private meeting we had. I was just trying to establish whether or not there was such a set of questions that we would want to keep in the back of our minds as we hear the witnesses.
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As you were outlining all the things that you could talk about, maybe we could choose those topics relevant to answering those questions. Since there exists no set of questions, please feel free to go wherever you think it is most important -
The Chairman: I'm so glad you raised it. To set your mind at ease, the direction is being set by fellow parliamentarians, along with your help.
Mr. Grubel: Thank you.
The Chairman: When we're on the east coast in a couple of weeks, we can really get down and discuss it in even greater detail.
Mr. Grubel: I apologise for the interruption, Mr. Good, but we have plenty of time this morning.
The Chairman: Thank you, Mr. Good, and thank you, Herb.
Mr. Good: As you noted, I am one of 24 executive directors on the board at the World Bank. This is, of course, distinct from the management of the bank. Our 24 directors represent close to 180 countries around the world. Because there are 180 members in the bank and only 24 directors, on average directors represent 8 or 9 countries each. In my case, I represent Canada, Ireland and 11 Commonwealth countries in the Caribbean.
Our basic functions are, first of all, to approve the loans that the bank makes to the member countries. Typically, we have two board meetings a week and approve anywhere from four to eight loans a week, amounting to several hundreds of millions of dollars.
As a matter of fact, the reality is that those approvals are largely pro forma because the loans will have been negotiated between the bank and the governments that are borrowing the money. But the comments on the loans, where they're detailed or largely policy oriented, will tend to be reflected by the bank staff in negotiations on loans down the line.
Beyond specific loans, we deal a lot with general bank policies in areas that you'll be interested in, whether it's poverty alleviation, the environment, or internal matters due to the bank financial management, and so on.
As well, but not of interest to you particularly today, I do represent the borrowers in my constituency of the Caribbean countries. They have a special set of interests that I have to try to represent as they borrow money from the bank.
Finally, the office is increasingly trying to help Canadian companies who have contracts from the bank - bank-financed projects - who may be running into problems of one type or another. Our office can play a small role from time to time in helping to resolve some of those problems.
That's roughly what I do. One of the subcommittees I'm on at the bank is a committee called CODE, the Committee on Development Effectiveness. I think that's part of the reason why I'm here today, because that's the theme of what I understand your work will be in the future. I'd like to come back later and talk about some of the kinds of things we're looking at in this committee. They may be of interest to you.
As a preface to that, though, I want to talk a little bit about the history of the World Bank and the IMF, just to set the stage for understanding why people are looking at changes in the organization now and the directions it will be going in.
The World Bank was set up in the post-World War II era, primarily to deal with reconstruction in Europe and Japan as a result of World War II damage. It was not initially there for a development country focus. That changed significantly in the 1950s and 1960s. It became an institution for developing countries, focusing on projects primarily to do with dams, schools, buildings - things you could feel and touch. That, in some sense, was what the institution was about.
The significant major change for the World Bank came in 1959. Prior to that point, it had been lending money primarily at very good commercial rates of interest, because it borrows cheaply because of the sponsorship of its large shareholder governments. So it can lend fairly cheaply as well, relative to what countries could borrow at.
Nevertheless, from 1945 to 1959 it was lending to countries at more or less a commercial rate. It was only in 1959 that an organization called IDA, the International Development Association, was developed. It was funded by grants from shareholder countries; therefore the money could be provided at essentially zero interest rates to the poorest of the developing countries.
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As you know, in the post-World War II era, because of the exchange rate problem and the competitive devaluations in the 1930s, the IMF had as its primary focus the maintenance of fixed exchange rates. That was basically its role until 1973, when the whole system of international fixed exchange rates came apart. So after 1973 the IMF started to look for a slightly modified role.
Circumstances in the 1970s and 1980s were such that both institutions started to change their role. As you know, there was a major oil crisis in 1973 and another one in 1979. Many of the developing countries, particularly the oil importers, ran up huge import bills and got themselves into huge debt, out of which they could not easily extricate themselves. Much of the 1980s was spent trying to extricate developing countries from debt problems.
The IMF and the World Bank became involved by lending to these countries to help them out of their economic problems, but not specifically to fix their debt problems. Along with their debt problems, they were suffering from fairly significant internal economic mismanagement.
One can talk about the evolution of South America, for example, in the 1950s, 1960s and 1970s - a whole economic policy that simply didn't work and was coming apart in the 1970s. This was also true in other parts of the world. For instance, things obviously were not working in Africa.
The bank and the IMF found themselves, almost because of these circumstances, doing a totally different kind of lending from what they had done in the past. I'll focus on the World Bank, but the IMF was doing essentially the same kind of lending.
They got into something called adjustment lending. This was really a very significant development. Unlike in the 1950s, 1960s and 1970s where you basically had a bank lending money to finance projects in developing countries, you now had a bank that was lending money to governments basically to put in their treasuries. It was money the government could use for budgetary support, for balance of payments support. It was money not associated with any particular spending on any particular project. It was simply money given for whatever use the government could make of it, whether it was to help eliminate deficits, to support the exchange rate, or whatever.
But there was a significant quid pro quo. The quid pro quo was that the IMF and the World Bank insisted that the government meet certain kinds of conditions that would help them improve their economies. The focus of the IMF's attention was on the importance of getting rid of deficits, the importance of getting inflation down, and the importance of getting the exchange rate right.
The World Bank would come in behind and say, yes, and let's make sure that in addition to those macro issues you also get the basic structure of your economy right. So we would like to see you going to fewer import restrictions; that is, trade liberalization. We'd like to see more price liberalization. We'd like to see you reform your public services. We would like to see your energy sector restructured in a way that reflects market prices instead of typically a state-controlled economy.
That was true whether it was energy, telecommunications, or agriculture.
So this was a branch of lending that really developed, as I say, out of the circumstances in the 1980s. It took the IMF and the World Bank very much into the fundamental restructuring of economies that had not been working. That was true of the South American economies and the African economies.
Then, of course, in the late 1980s and early 1990s, with the collapse of the Soviet Union, you had a large number of so-called countries in transition, which were in fact worse than at square one, because they had a legacy of state planning. They needed and wanted to become market-driven economies.
Again, the IMF and the World Bank made the same kind of arrangements. They would give you lots of money to help you make sure your macro situation, your exchange rate situation, worked. But at the same time, you would undertake all of the following things I've just mentioned - privatization, liberalization and so on. That switch from project lending to adjustment lending was therefore a very significant part of the evolution of the two institutions.
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To conclude that part of my comments, if you look at the roles now of the IMF and the World Bank compared to their roles in the 1950s and 1960s, it's clear they're quite significantly different.
The first 50 years, 1945 to 1995, of those two institutions concluded, as you said, Mr. Chairman, I guess, last year, and the annual meetings of the bank two years ago in Madrid were highlighted by the fact that it was the fiftieth anniversary. There were a number of comments from governments, from academics, from NGOs, about what these two institutions had achieved in the past 50 years and what they should try to achieve in the next 50 years.
What I thought I would do is just take a few minutes and tell you about what people felt the issues were with respect to those institutions - I'll focus on the bank - what the issues were that needed dealing with as they launched into their next 50 years. It really depends in part on who you're talking about. It's a question of perspective. Different groups of people have different perspectives.
If I start with governments, who are the shareholders in these institutions, one of their focuses was basically on the cost and efficiency of these institutions. That was a theme that was picked up in the Halifax summit in June 1995.
I'll exaggerate a bit to make the point - I often do this; we all do; it makes it easier to understand the point - that arguably from the point of view of some people, and to a certain degree governments, they have seen the World Bank as an arrogant, overpaid, bloated bureaucracy that needs to be streamlined and modernized. So take 75% of that and that's roughly the view.
It's an institution that needed to work a lot more closely with other international financial institutions, particularly the regional banks, the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, which are in roughly the same business but obviously just for particular regions throughout the world. The bank needed to look at its menu of lending instruments. It's basically an institution that needed to be modernized, streamlined, downsized, looking a bit to the future.
That was the view of governments, basically - and not surprisingly, because I don't think Canada was untypical. It was a country that had been for some time going through a lot of deficit cutting, downsizing and streamlining itself.
So to look at this big, not-so-efficient bureaucracy in Washington and not to ask of it what was being done at home was clearly a logical thing to be happening. It was happening, and Canada was typical of a number of countries asking for the same kind of change.
So that's government and shareholders. There's another area people talked a lot about. Here it was as much a government view, but to the government view I would also add the view of the NGOs, non-governmental organizations.
Governments and NGOs had a view that the bank in particular was not a very policy-adaptive institution. By that I mean that developed countries in particular had a view with respect to the importance of policies such as poverty alleviation, the environment and sustainable development, the role of women in development, what's called beneficiary participation, which actually means the participation of the people in the field who are affected by bank lending, by projects, and the role of the people in the development of those projects. They also spoke about the role of the private sector, which has changed fairly significantly in recent years.
In all of these areas developing countries had their views as to the importance of these policy initiatives. There was a certain sense the bank was not adapting as quickly as it should to incorporate them as fully in their lending policies as they would like. There was always the sense of having to push the bank to be more policy adaptive.
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There's quite a long story behind all of this. I'm not sure what I just described is actually a totally accurate perception. Personally, I don't think it is and I will often make the case that the bank is actually quite policy adaptive. It's just that it works in an environment that is very heterogeneous.
I sit on a board that has people from the developing countries, from Muslim countries and people with different perspectives. The notion that roughly a northern-based policy initiative is going to be embraced as quickly and as warmly around a heterogeneous board like that, as it is perhaps in Canada, is to expect something that simply can't happen. So it operates in a world of some constraints. Under those constraints, I would say it is reasonably policy adaptive.
My point in all of that is simply to say that in terms of criticisms of the bank, one of them was that it's not as adaptive to policy initiatives as it might be.
The third area of criticism is, I would say, almost an exclusively NGO criticism. I don't hear this much from governments, but you will hear this all the time from any NGOs you deal with. That is that the bank has a flawed development model. It has a way of approaching development that doesn't work, if you listen to the NGOs. This is not me saying this; this is the NGOs saying this. That's why in fact there was so much criticism by NGOs of the two institutions in Madrid.
The IMF and the World Bank clearly come at development top down. Their view is that our view is that if you don't have a good macroeconomic policy, anything you do below the level of macroeconomic policy - structural policy or projects, whatever - simply can't work, that you can't develop in a country that has huge inflation, massive deficits and unstable exchange rates. So the bank and the fund say get your macro policy right first and then work into these other important areas of economic development.
The difficulty is that as many of these countries in Latin America and elsewhere came out of massive hyperinflation and did what had to be done to control deficits and inflation, there were significant cutbacks in government expenditure, which of necessity sometimes meant reductions in spending on health, on education, on a lot of social sector areas, expenditures that couldn't have been maintained in the long run in any event. But there was a significant social impact of a lot of these adjustment policies that I told you became important in the 1980s.
What the NGOs see is a lot of this negative social impact of the macro policies that the IMF and the bank have insisted on as conditions for lending the governments money. The NGOs come to the conclusion that you just stay out of that business. This is again a bit of an exaggeration, but roughly, don't worry about the macroeconomy, just go in there and help people with the dams and the bridges and the schools and whatever.
So there's this significant gap, if you want, between the mindset of the NGOs on the one hand and the IMF and World Bank on the other with respect to the importance of macroeconomic policy. That is a very significant difference of view. It's one that continues today and one the bank in particular tries to address.
Right now, for example, there's a task force at the bank with a number of NGOs looking at a number of countries. It's always the same heading. It's called the social impact of adjustment lending. It's something that's really not resolved yet, and it's a big issue.
It's a very complex area, and I think there is something there. I personally think there are some improvements that could be made in the way the fund and the bank go about the conditionality they impose or they agree to with countries that borrow, that would make the social impacts of the macroeconomic policy of these institutions better. The two institutions continue to struggle, and I think they have to move in that direction. But that will be part of the challenge for the next decade or so.
Those are roughly the criticisms.
The new president, as you mentioned, Mr. Chairman, came in and inherited a bank that could be roughly characterized as, one, inefficient, bloated and arrogant; two, not policy adaptive; and three, with a problematic development model. His view after a year in office, much of which he has spent travelling - he's visited over 40 countries so far - as I understand it, is that the difficulty with the bank is that it has what is often called an approvals culture, which basically means that the bank is devoting the largest part of its resources to getting loans agreed to with countries and approved at the board and not devoting nearly enough of its attention to the actual implementation of the loan after it's agreed to. Clearly it's the implementation that's important.
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There is no great merit in lending a country money for a project if in fact the project is not implemented properly and successfully, because out of it flows the development benefits. His feeling was that the bank did not have that appropriate division of resources between getting to approval - getting it to a board and approved, by the way, can take two or three years - and implementation. So he thinks that's why the bank has a large number of what are rated unsatisfactory projects. A fairly high number - about 37% - of the bank's projects are rated unsatisfactory in a development sense, never in the sense of not being repaid, because the bank's loans always get repaid, but unsatisfactory in terms of the development impact.
He also feels that the bank is not oriented as much as it should be towards the needs and interests of the borrowing countries. Basically, world staff don't listen as well as they might, and that's an issue. Nor does he feel - and this is really at odds with the conventional wisdom, I would say - that the bank is as skilled as it should be in terms of technical expertise to help these countries develop, whether it's expertise in the banking sector, education, public sector reform, or agriculture. That is quite at odds with, I think, the conventional view, because most see the bank as being full of maybe arrogant, but certainly very knowledgeable, people with lots of expertise, and I think to a significant extent that is true.
At the same time, when you're going into the banking sector in a large number of countries around the world, you must have a pretty good technical knowledge of the banking sector if you're going to help them fix it. So if you go into Mexico post its 1994 crisis and say you are going to help them restructure and recapitalize their banking sector, you had better have some people who know what they're talking about.
I have an interesting 30-second diversion. I was recently on a trip to Cambodia and China. When I was in China, we talked with a number of the top people there, and they made the point that the bank had been really very helpful in the first stage of the liberalization of the Chinese economy. It told them about prices and how the market worked, and it got them on the right track. They said they're now at the second stage, and they understand that lesson. What they need now is really technical help. How do they set up their stock market? How do they regulate this or that sector? So they're asking for that kind of help, and I had the sense that they felt maybe there wasn't quite as much of it at the bank as they would have liked.
The president wants to address that issue. He has a number of initiatives under way, which I won't talk about unless you want to at some point. He's looking at significant retraining of bank staff. He's looking at building up networks within the regions in which bank staff operate, because he feels that the best practices the bank has are not even shared among bank staff and are not as widely disseminated internationally as they should be.
He's looking at new bank products instead of just straightforward loans. For example, there's a lot of work going on in guarantees as a way of better meeting the needs of some of the countries.
Historically, the bank has loaned money to countries in what's called a basket of currencies. So it might give a loan to, let's say, a country in the Caribbean, but the loan, if it's $100 million, might be $30 million U.S., 30 million yen, 30 million Deutschmarks, and 10 million something else. Of course since the country will typically earn its export revenues in a particular currency - in that case U.S. dollars - the country is suffering some exchange risk.
In fact, a lot of countries got burned recently, because in recent years the yen appreciated so much. If you were a dollar export earner, you would find yourself having to pay back a loan that in fact was larger than you had originally anticipated, simply because of the appreciation of the yen.
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That put a lot of exchange risk onto borrowing countries. The president said this was crazy and that we should not be doing this to poor developing countries. The bank has now gone increasingly to what's called a single-currency loan so that you can borrow exclusively in the currency in which your economy will tend to earn. For example, if your exports are largely in dollars, you will borrow in dollars and therefore avoid significant amounts of exchange risk associated with multiple currency lending. He's keen on developing these kinds of new products, whether they be guarantees or ways of lending money.
Those are the kinds of things he's doing. He's looking at a new organization within the bank. He's increasingly focused on what are called country directors, whereby he will have one person in the country.... We have one person in Mexico who's responsible for the total Mexican portfolio. It's a way of making sure that people are accountable.
Historically, teams of people have been involved in projects in countries, and the teams changed several times before the project was actually implemented. If it doesn't work in the end, there's no clear responsibility. So he's trying to increase the accountability and responsibility of staff and to have these focal points for accountability. There is a fair amount of organizational change within the bank.
It will take another year or two for all of this to unfold and for anyone to really see the impacts, so there's nothing to be done but wait. My own sense is that he has as good a chance as any president has had in the last couple of decades to generate change. He's very dynamic. He's done an excellent job in terms of the presentation of the bank externally, whether in meetings with parliaments, with Congress, or with prime ministers.
He's clearly done a lot for the image of the bank outside. Inside he's been pushing hard and making changes, but as I say, we'll have to wait for year two to see what the impact of those is.
In the meantime, however, there are some changes external to the bank that could have a far more dramatic impact on its future than the things I've just described with respect to internal change. The first thing I would mention is what's going on with respect to IDA, the International Development Association, which as I mentioned is the fund that provides money to the poorest developing countries on basically a zero interest basis.
This is very much concessional lending. Because it's concessional, the only way you can lend these moneys on an ongoing basis is to have a pool of money that gets replenished every certain period of time. This IDA pool of money has traditionally been replenished every three years, and we've recently gone through something called the eleventh replenishment or, if you want, IDA 11. IDA 11 has been extraordinarily difficult, because most of what happens in the negotiations of putting this pool of money together is that countries watch what the United States is doing. There are some changes over time, but everyone more or less contributes proportionally, based on historical shares, to what the U.S. does.
This time the U.S. has balked, for reasons that you'll be aware of and that have a lot to do with internal politics and ideology. For all of those reasons, the U.S. has got behind in terms of its contributions to previous pools. It hasn't paid all of its money into IDA 10, for example, and IDA 11 has therefore become even more problematic.
The outcome of a year of negotiations was that IDA 11, which typically is for three years, has an unusual structure, whereby in the first year there is a special interim fund, to which the U.S. did not contribute. People accepted that. The U.S. has said it will contribute to the second and third years of IDA 11 but not to this first year, and it's kind of a breathing period for the U.S. to get its act together and decide what it really will do.
But the quid pro quo for the U.S.'s not contributing was that the rest of the countries that are contributing said U.S. companies would not be allowed to participate in the projects that were financed by this one-year interim fund. Of course, all hell has broken loose in the Congress in the United States, because they wonder how this can be. They feel they contributed so much money over the past several decades that to be shut out simply because they're not participating for one year is unacceptable.
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I'm going to be careful here, because Alister and Jill are actually much closer to the ins and outs of all of this than I am. We are now roughly at a point at which the U.S. is asking whether their companies could be let back into this interim fund, because it will make life easier for them to get more funds in the future. The rest of the world is humming and hawing, and we're not sure where that discussion will go.
But in some sense that's not the main point. The main point is that the U.S. is increasingly backing away from concessionary resources for development funding in IDA. Therefore, the future of IDA in some scenarios is at risk. Say one of the worst scenarios unfolds and IDA somehow collapses as we get into the rest of IDA 11 or into IDA 12. There is some possibility that this could happen. It's not a probability but a possibility. That can fundamentally affect the way the bank operates and the way development funding operates in the years ahead. So that's really very significant.
Here's the other significant event that will affect the future of the bank in the years ahead. It is what has happened with respect to private sector capital flows to developing countries.
Historically, the bank and the fund, the regional development banks, and countries with their bilateral aid put about $50 billion a year into development. Those are what I would call official flows. That was true throughout most of the 1980s and into the 1990s. It continues to be the case that official capital flows are about $50 billion a year.
Back in the mid-1980s or late 1980s, private sector capital flows, whether it was in the form of foreign direct investment, portfolio capital or commercial lending, to developing countries historically were less than that. They were about $40 billion a year back in the mid-1980s. Starting in the late 1980s to early 1990s, those flows increased enormously. Now they are about $170 billion a year. So they've gone from being less than the official flows to more than three times as large as the official capital flows.
That fundamentally changes the role of the importance of the bank in terms of the provision of financial resources to developing countries. It makes the private sector that much more important.
And of course the private sector is going into these countries because they are developing. South America's economies are now largely stable. They are developing market economies. Private money feels a lot freer to go into these countries.
You can get serious hiccups. Clearly, Mexico was a very serious hiccup. Again, if you look at Mexico, it was not exclusively Mexico's fault. Once capital starts travelling around the world chasing interest rates, what you will find is that if interest rates go back up in the United States as they did in 1994 - this is when the U.S. raised its interest rate eight times - the capital will flow out in part because of that, not just because Mexico is not doing everything that people had hoped.
So it really is a globally integrated world out there. But the capital is flowing, and that itself is changing the relative position of the bank in the grand scheme of things.
I have just one more comment about those flows, however. They are largely in about 15 to 20 of the developing countries that are better off, such as the Chinas, the Indias, and the big countries in South America. Only a minute fraction of those flows go to Africa. What you're seeing on the development front increasingly is a two-track situation in which, as I say, the transition economies such as South America and Asia are more or less performing as the bank and the fund would like to see them perform. There are major problems here and there, but generally they are developing as market-oriented economies that are increasingly integrated with the developed countries of the world.
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But on the other hand, in Africa it is still much more problematic. For many years, Africa will need the kind of concessionary aid that only an IDA - which as I said, is in some trouble - can provide.
My general point, however, is that with this tremendous increase in private capital flows, the relative importance to the bank as a finance provider is less, and it comes back to the question of whether or not it can be a much more important provider of things such as policy advice to governments and technical expertise. These are the kinds of things that in some areas the private sector is not typically as prepared to do or capable of doing.
That's really what I want to give you in the way of background and where we are. The final section I had here was what it means for your desire to focus on development effectiveness, which is the theme -
The Chairman: You might want to leave that portion until later in the meeting, because there may be some more general questions to begin with, Mr. Good.
Mr. Sauvageau has asked us to leave his question aside for the moment.
We thank you for the good overview, Mr. Good. We're dealing with a very complex area. There's the whole area of IFIs. Within that, there's the World Bank itself with 8,000 or 9,000 employees, which is a very large organization.
Mr. Grubel, did you have any questions to start with?
Mr. Grubel: Thank you, Mr. Chairman. You anticipated many of the things I was going to say. You are skilful in this manner.
When you said the bank needs to get expertise to give advice on banking or on how to set up a stock exchange or even that the bank is needed to give advice on general economic policies, I suppose you're speaking in the interests of an organization that wishes to survive. But I really don't see why these kinds of services couldn't be provided by the private sector at least as readily. We know from experience around the world that whenever the delivery of services of that sort has been privatized, we do get a bigger bang for the buck.
So what is Mr. Wolfensohn's justification for saying that it takes the World Bank in order to tell Mexico how its banking system needs to be adjusted in order to deal with the current level?
Similarly, if $180 billion has been the figure in recent years for loans to developing countries, what has been the amount of money flowing through the World Bank?
Mr. Good: Your point is a good one, and I don't think there's an easy answer. I don't think the bank actually has a definitive answer at this point, despite my more or less paraphrasing what the president said.
Clearly, there are some areas in which only the bank and the fund can legitimately provide advice, which is in the area of macro policy and some fairly high-level structural policy. Clearly, the bank and the fund continue to make loans to governments to help them support their balance of payments and budgets. The quid pro quo is that you have to make sure you get your macro economy performing well.
If you are going to sit down to talk about the rate at which you should reduce your deficit, how to change the composition of public expenditure in a way that will have the minimum social impact as you reduce your expenditures, or appropriate kinds of monetary or exchange rate policies, then I think it's fairly clear that the IMF and the World Bank are going to be doing that. They're doing that because they're providing the money that permits the countries to get through difficult times while these adjustments are taking place. That's part of the deal.
I don't think that's going to change. The issue there is that the bank and the fund had better have the people who have more than just an academic understanding of macroeconomic policy; they had better understand how policy development, budget-making and the nature of the political systems in these countries work. They had better be able to blend that into their purely analytical approach to those issues.
So in that sense, there is some improvement that needs to take place in the quality of advice that both institutions are providing, but I think they have to provide it.
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As you work your way down into areas like reform of the public service, the bank has worked in so many countries in public sector reform that it can, as a minimum, compete with anything the private sector can offer in that area.
In areas such as land reform, for example, there's a tremendous amount of work going on in land reform in the transition countries, still in South America. Whether it has to do with land titling or just exchanges of land, the whole continuum of land issues, again the bank has a lot of knowledge and I think it can be helpful.
I take your point, and I think everyone does, that it's a very fine line between whether the bank has the comparative advantage or whether the private sector does, and clearly as you get into some areas - and banking may be one of them.... Clearly, the bank can't do it all, so will have to engage the private sector. Nevertheless, in terms of where the responsibility should lie, I think your point is valid and that is exactly what the president is struggling with. I don't think he has a definite answer. I think he is saying that in the areas where the bank purports to provide technical advice and continues to do so, it's going to have to improve the quality of what it's doing.
Mr. Grubel: I have a small follow-up on that. For example, when you provide advice on public sector restructuring, does the bank actually charge for that, specifically? Is there any consideration given to making the giving of such advice financially self-sustaining and independent from the other activity? Do you know what I'm driving at? It has the other advantage that people often listen much better to advice they have to pay for than for free advice or when you only have the leverage of saying, if you don't do what we're telling you, we won't make that loan to you.
I think that's especially relevant to the kinds of narrower technical issues such as bank reform, stock exchange and various other issues you could identify. Is there any thought given to charging for those on a cost-recovery basis?
Mr. Good: Yes. You touch on another important issue. It has been discussed in the past year and there are really no clear conclusions at this point other than to say it's an issue.
Typically, a couple of different kinds of things happen. Often in terms of public sector reform, the funding provided is general funding for budgetary purposes, perhaps with an allocation of some of that for the financing of consultants and technical assistance to do what's required.
Sometimes technical assistance is provided as part of a project loan. There are different ways in which the technical assistance is funded, but what we have not really seen yet is something that will be considered a strict cost recovery for technical assistance provided. But a lot of people are suggesting that it should happen.
Shall I comment on your other question?
Mr. Grubel: I would be happy to know what the relative size of the actual loans are that the bank now provides.
Mr. Good: Gross, the bank makes about $25 billion of new commitments a year, and very roughly, about $18 billion or so would be at what I described as commercial rates of interest under the bank group that's called the IBRD, the International Bank for Reconstruction and Development. That's the commercial part of the bank. It does about $18 billion of the $25 billion, and the IDA, the soft loan window, does about $7 billion. Those numbers move around by a billion or two depending on which area you're talking about, but that's roughly the situation. That's gross lending.
One of the complaints of the NGOs that you may hear as you do your work is that on a net basis it's quite different. In fact, the bank is now at the point where it is being repaid the $18 billion at roughly the same rate that it's lending, so that it's net outflow is roughly zero with respect to the IBRD.
With respect to IDA, it doesn't get paid a great deal back. Its gross outflows are roughly its net outflows, so that overall the bank's net outflow is probably roughly equal to its IDA lending of about $7 billion a year.
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But there are a lot of countries you can look at in South America that are now getting loans from the IBRD, the commercial part, but in fact are paying back to the bank a lot more. So the net flows in South American countries really go from the countries to the bank - to which the bank says, you know, we are a bank.
The Chairman: I'm sure you have more, Mr. Grubel, but if we could -
Mr. Grubel: I understand. We must share.
The Chairman: There'll be further opportunities. Thank you, Mr. Grubel.
Ms Torsney.
Ms Torsney (Burlington): Thank you. I guess there are two things that go with the work you're still doing and the work you could still be doing: one is that as governments are doing their restructuring.... Granted, there are cuts to education and health care and people are upset about that, but one of the shocking things is that some of the other spending still available is for things like defence.
I remember talking to a parliamentarian from Slovenia who was saying, look, we're this little country surrounded by all these big countries and yet they want to spend money on defence. It's absurd; they could never defend themselves in the first place, so why not educate the kids? But he could not get that through their parliament. Do you also guarantee that this sort of spending, which is really almost inappropriate in this case, is cut as well?
You said you meet twice a week and you do approvals of loans and what have you. My other question, as part of that, is part of the information that is in the approval package, or in the package of information, gender analysis of the loans and the projects so you can see what the differing outcomes will be? Not that you necessarily want to change this, but it's just so you're at least made aware that there are differing outcomes for men and women in the community.
Mr. Good: Yes, on both those points there's a lot of attention.
On your first point, the bank is increasingly involved in what are called public expenditure reviews in which it works with the country to analyse the composition of its public expenditure with a view to having the country shift over time into areas that are generally conceded to be socially more beneficial for the country. Typically, to the extent the bank can get countries to move into those areas, it will by definition involve movement out of what's called unproductive expenditures. Unproductive expenditures are often a euphemism for military expenditures.
There is a desire to do exactly what you're talking about, and the bank moves as much as it can in that direction. There are difficulties, which are in a way related; one is that countries consider themselves sovereign and say, there is a limit to how much you can tell us to do; after all, you are lending us money we are expected to repay, so there's a limit to the conditionality you can attach to your loans. So there is this real sovereignty thread that runs through a lot of the commentary of board members of developing countries, as we discuss this kind of issue. But having said that, there is a tendency to move in that direction.
The only thing I was going to add, and maybe I shouldn't -
Mr. Grubel: Go ahead.
Mr. Good: I was in Cambodia a while ago, too, and the Khmer Rouge is still very active in the northwest part of Cambodia. Clearly the whole Khmer Rouge-Cambodian government issue is still very much there; I was surprised at how much it's still there. They are still spending a fairly significant amount on military expenditures in Cambodia. I was just reflecting to myself that I'll be very interested when that discussion comes to the board, because on the one hand, you're quite right that we will want them to move their public expenditure, but on the other hand, in some cases clearly there are limits to what you can expect them to do.
I hesitate to make that comment, because I didn't want to undermine the main point to your question, which is, yes, we are looking at public expenditure composition increasingly.
On your second point, gender analysis, I wouldn't say it's always there, but it's there a lot of the times because there are people around the board, including myself.... But I must say there are in fact three women executive directors who push it a lot harder than I do, who keep making that point, and the bank is responding.
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It's now increasingly doing what's called social analyses of projects, including gender analysis. We do see it more and more. In fact, programs increasingly being focused on that seem typically to be much more oriented toward women in development, this whole area of what's called ``microfinance'', or very small loans of $100 or $200. I'd say almost exclusively it seems to go to women in development. So there really is a lot of attention paid to it.
Ms Torsney: In Slovenia, for example, it seemed part of the problem was the fact that they had very few parliamentarians who were female. So maybe they would have that change within the government and within their society if they had some education. I wonder if you do much education.
More important than even Slovenia is the situation I perceive to be happening in Africa and that I can see being exacerbated by this increase in private sector moneys going in. It's an arms race, and, yes, for the sake of your sovereignty you have to arm yourself, because your next-door neighbour is. But it's all to benefit the countries that are producing the arms in Europe or the United States or wherever. It's completely unproductive spending, and worse. Mining in Angola and everything else does not really help people feed their children or help it become a more productive workforce.
How are you managing...? I'm particularly concerned about Africa from that perspective.
Mr. Good: As I said, there really is only a minimal amount of private sector money going into Africa. When it does go in, it is the areas you talked about, however, such as resource development.
With respect to Africa, it is recognized as a major problem. I would say at this point the nut has not really been cracked. The area people seem to want to focus on as the way to break into development in Africa is through what's called capacity building, or institution building. The sense is that these countries, assuming they can stay out of a state of civil war, are going to have to develop their basic institutions. Without that at a core, nothing else is going to work, so focus on that.
Now there is a major effort among African countries - and the bank is involved - to see what kinds of things can be done to improve the quality of public services in these countries and other related quasi-public sector institutions with a view that if you can make some progress there, you can build out from there. But you have very much the sense that this is a good idea, so let's try it, and if that fails, then we'll try again.
There are people who will tell you that, no, actually there's more light in Africa than you might suspect. People will quote to you a number of countries - Uganda, for example, is almost always cited as a country in which progress is being made - in the last half-dozen years that have gone democratic, and that economic growth is falling in some of them. They're saying not to be as pessimistic as most appear to be.
I'm not sure that's a unanimous view, but certainly some people who know Africa have that view.
The Chairman: Thank you, Ms Torsney.
[Translation]
Mr. Sauvageau, please.
Mr. Sauvageau (Terrebonne): This morning, I was at the Standing Committee on Foreign Affairs and International Trade, where we met with an assistant to the Auditor General of Canada who was discussing our aid program in Eastern Europe. We were told that the aid provided by Canada to Eastern Europe was of the order of approximately $100 million and that Canada was one of the most modest partners for all of Eastern Europe, with Germany being the largest, if I'm not mistaken.
I had prepared a question during that committee and I think that it can also be asked here. How are our efforts coordinated between bilateral aid in which approximately 10 countries of Eastern Europe participate individually, and multilateral aid provided through the IMF, the World Bank and so forth?
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We see on page 136 of the document that you lent Russia $300 million for the diversification of industry, etc. Therefore the World Bank even offers development aid programs, as you stated earlier. Canada does this at the multilateral level, as well as Germany and other countries. How are these programs coordinated to increase the efficiency of the amounts involved?
Mr. Good: This varies from country to country, but there is what we call a consultative group of ten donor countries and the World Bank which are interested in the future of a given country, and we discuss the amount of money that we will donate and the nature of the programs we will implement. From time to time, the World Bank takes the lead; other times, it's the UNPD, that is the United Nations Development Program.
There is certainly some sort of coordination, and the nature of that coordination varies according to the situation. In Bosnia-Herzegovina, it's quite special and different, but from the standpoint of other developing countries, it is clear that improvements in coordination would help a great deal.
Donor countries sometimes present a problem, in the sense that they want to give a certain type of aid and they indeed do so. It sometimes happens that four or five countries say they will provide aid for environmental programs, when the developing country needs it for schools, highways or something else. The needs of developing countries and the wishes of donor countries.
We constantly try to improve the situation, which is far from ideal right now.
Mr. Sauvageau: Is there more growth in bilateral or multilateral aid? Are countries focusing more and more on multilateral aid? Is the growth curve of aid more significant at the multilateral or bilateral level?
Mr. Good: There hasn't been much change in these two areas. As I said earlier, the combined amount of bilateral and multilateral aid is always approximately $50 million a year. The real change is in the amount of aid from the private sector. That amount has jumped dramatically, it went from $50 million in the 60's to $170 million in 1989. I have problems with French because I also studied Spanish.
Mr. Sauvegeau: You have no problem.
Mr. Good: Therefore, the major changes has been the influx of money from the private sector. There has not been much change with regard to the bilateral and multilateral sectors.
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Mr. Sauvageau: In terms of multilateral organizations, there is the World Bank but there are also other organizations. Is cooperation between them easier?
Mr. Good: Between the World Bank and the International Monetary Fund?
Mr. Sauvageau: Yes, and with other organizations, if any.
Mr. Good: There is a great deal more cooperation now. There has always been very close cooperation between the World Bank and the International Monetary Fund. In the past few months, relations between the World Bank and the regional banks have also improved, upon the request of governments.
Mr. Sauvageau: Thank you.
[English]
Mrs. Brushett (Cumberland - Colchester): Welcome back to our committee one more time. It's always good to have you back, and it's always enlightening each time you come. We feel better informed and more knowledgeable about the work you're doing throughout the world.
One point has been a major theme here this morning: sovereignty versus conditions of lending. I can see that is a really difficult compromise you're having to make in every decision in your lending process.
Let me go go through the annual report very quickly. You are a bank, but I didn't see a balance sheet or statement of operations. I would like to have seen that as part of your annual report, as an overall picture to see where you are standing financially today. Perhaps it is there, but I didn't see either a statement of operations or a balance sheet. Considering what Canada is doing with all the restructuring, cuts, and deficit reductions, and the hours we're putting in in our own country, I would like to have seen what's happening with this organization in that area.
The second point comes back to this business of sovereignty versus lending, and borders coming down in all financial sectors, where the private sector is stepping in and lending on the basis of good, sound business practices.
I'm receiving criticism from the public that says we're actually being conducive to poor government, inefficiency, the increase of arms and combat, simply because we go through such things as the World Bank and provide the support. If, on the other hand that country had to take the appropriate steps to become more cost-efficient, more responsibly effective to the constituents of the country, it is said they would not find themselves in these very confrontational and war-torn zones and states. They would have to be more effective and responsible to the people of the country.
So I'm hearing a lot of criticism here. It comes back to your business of sovereignty versus conditions of lending, and whether we should be there at all.
I'm looking for some responsible...just a more finite answer in that area.
Mr. Good: On the first question, the bank certainly does publish its balance sheet and income statement - I'm not sure whether it's in that report - and all kinds of other financial detail on a regular basis.
Typically the bank makes about $1.3 billion a year -
Mrs. Brushett: Is that profit?
Mr. Good: - in net income, profit. And then one of the big discussions actually is how to allocate that profit, for example, putting some of it into reserves to strengthen the balance sheet you're talking about, or allocating it for other uses.
Typically it gets used in several ways. This year one of the important uses is that some of it is put into the concessional pool of funding. Some of it is used for special funds. A special fund, for example, was created to provide grants to Bosnia and Herzegovina, even before they were full members of the bank, which they just recently joined. So sometimes the income is used that way.
.1050
I'm not sure whether this is a red herring, but it's interesting that this $1.3 billion in income actually is not really earned on the loans themselves. This is in the sense that the margin the bank charges on its loans amounts to about 25 basis points above its borrowing rate.
So if the bank is borrowing at 6%, its lending rate, after various adjustments, will in effect be about 6.25%, and that 0.25% doesn't even cover the administrative costs of the bank. So if the bank were to finance 100% of its lending by borrowing in the market, it would actually be losing money.
Fortunately we have countries - like Canada - that contribute to the capital of the bank. That capital earns interest at 5% or 6% and provides the cushion that permits the bank to operate on a profitable basis year by year. So the net result of the earnings on the capital, plus hardly anything on the loans themselves, ends up generating that kind of net income for the year.
Mrs. Brushett: As a follow-up, then, would it be appropriate for this committee to request a copy of your financial statements?
Mr. Good: Absolutely.
Mrs. Brushett: Oh, there is a balance sheet. Does it indicate that this capital investment does accrue this interest or capital gain?
Mr. Good: No, it doesn't. It's interesting; I'm not an accountant, but I've learned how accountants work. I recognize that they can allocate things in almost any way they choose.
If you look at the bank's particular accounting statements, any loan, any $100 loan, is typically - and, I presume, by designation - roughly 20% capital and 80% borrowed funding. So in fact the bank will show that it's making a profit on its loan. That is contrary to what I told you, but it's an allocation issue.
From an economist's point of view, the reality of what's going on is as I described to you. But the accountants present it in a different way, and so you will not find what I said to you reflected in the numbers. You will find the accounting presentation, and they will show that the loans make money.
As I said, it was a bit of a red herring, and I was hesitant about bringing it up, but I think it's important to understand the way....
To be candid, part of the reason I do this is that the president himself has made this comment on half a dozen occasions in the last little while. He's keen on having the directors themselves understand the financial structure of the bank, and the way it works.
Mrs. Brushett: I truly appreciate your comments. As our honourable colleague from the Reform Party mentioned earlier, we're here to solicit sincere input. There are no parameters, as far as I'm concerned, at least. I think it's clear to all members...to look objectively at how efficiently and how well these dollars are spent and invested.
So I thank you very much for your sincerity.
The Chairman: Thank you, Ms Brushett.
Mr. Good, I know you have a plane to catch, so we don't have too many more minutes with you. I did want to raise the development effectiveness or impact issue. But are there some very short concluding questions just before we open up that subject and then adjourn?
Mr. Grubel: I just want to quickly add something. One other criticism I often hear is that because most of the lending is to governments and government-run projects, in fact the policy of the bank along those lines goes against the trend in the world.
BC Hydro and Ontario Hydro are likely to be privatized. Yet if we were a developing country and we were to get money from the World Bank in order to establish an electricity-generating facility, it would have to be owned by the government. Is that correct?
Mr. Good: You're correct in saying that the bank makes loans to governments. The bank itself does not make loans directly to the private sector, for example, for a power-generating station. But it has been recognized for many years that the bank, as a group, should be lending in that area.
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I forget the year exactly, but a number of years ago there was a part of the bank called the International Finance Corporation, the IFC, which was established to lend directly to the private sector. Although I forget the exact date it was created, I can tell you that in the last two or three years this institution has started to grow very significantly, and will grow even more significantly in the years ahead. Its role is to do exactly what you described: lend money without government guarantee to the private sector for development projects.
It does more than lend money; it also has the capacity to take equity in these projects in developing countries. Perhaps most important of all, beyond contributing its own equity and lending, is that it has the capacity to syndicate loans to finance these projects.
The syndication role of the IFC is becoming considerably more important. And for your information, Canadian financial institutions - the banks and the caisses de dépôts - are increasingly looking to work with the IFC as part of these loan syndications.
What I am saying is that although this institution is still in, let's say, the $3 billion a year range, compared to the $25 billion a year range of the bank, it is growing in size. I would anticipate that it will become a larger player in the years ahead.
Mr. Grubel: Yes, I remember the example where the private sector was ready to do what we have done now in Toronto: establish a toll road between Buenos Aires and one of the big towns. The government kept putting up roadblocks to the opening up of that project. Why? They were negotiating with the Royal Bank for money to put into public roads.
Have any efforts been made to change that bias towards public sector, rather than private, financing?
Mr. Good: Oh, yes, there's a big push at the bank to increase the amount of private sector financing of infrastructure. The example you use is a classic one. I've seen a lot of examples of private sector development of roads based on future agreements on tolls that would permit that to happen.
I'm sure the case you described is correct, but I wouldn't say it's typical. I see increasingly a willingness in governments to permit private sector financing, because there are so many other places they can use the money.
As well, just to complete the story of the bank's institutions, there is a fourth group in the bank called MIGA, the Multilateral Investment Guarantee Agency. It will provide guarantees to private sector companies that governments will not break the contracts they make with the private sector.
So, for example, in the case you described, if there is a contract between the government and the private sector road developer on tolls, MIGA will guarantee that the government will not renege on that agreement. So it recognizes the problem.
The Chairman: Mr. Peterson, did you say you had a short question?
Mr. Peterson (Willowdale): I don't want to interfere with your -
The Chairman: No, please.
Mr. Peterson: I apologize for coming in late.
Maybe you've dealt with this, but how do you rank your efficacy compared to that of the UNDP?
Mr. Grubel: Infinitely higher.
Mr. Good: You know, I don't want to duck this, but I can't say I've had as much exposure to UNDP as I would like to have had to be able to give you a good answer. All I can tell you, though, is that I see the UNDP as....
The one exposure I had was in Cambodia. We spent an afternoon with the UNDP there finding out how they were coordinating things across a number of fronts, including de-mining. I must say I was quite impressed with the work the UNDP is doing.
I think the fact that I can't answer your question reflects very well what people have been saying for the last year or two: the bank needs to work more closely with some of these United Nations agencies like UNDP. I just think that historically we haven't worked as closely as we should have.
The other exposure I've had to UNDP is in a few countries where they will take the lead in terms of donor coordination. One of the countries I represent is Guyana. I recall being there a year ago, sitting around a table with about 15 donor countries. We were talking about donor coordination, and I said that sometimes the bank does it. But on that occasion I recall the UNDP did it; they played a role.
.1100
Based on limited exposure, if I had to draw a conclusion, it would be that the two institutions are quite complementary. They work well together in the field. Although, as I said, there is the possibility of significantly better donor coordination, I think it's not all that bad, and we two work well together.
The Chairman: Thank you. In the interest of winding up in the next few minutes so you can catch your flight, Mr. Good, but also in the interest of our future work, I want to advise colleagues - although I did informally advise you - that I did a bit of homework over this past summer. It was on a subject within the many subjects that would be easy to choose.
That subject area - and I'll ultimately need your concurrence on this - is one that was the highest on Mr. Wolfensohn's list, and that is development effectiveness or development impact. It's a taxpayer issue, a bank issue, and a borrowing-country issue.
Mr. Good is a member of the committee on development effectiveness at the World Bank. Having listened to him this morning, and based on his fine presentation, I assume he must be a leading member of that committee.
In the final few minutes we have, I wonder if you could just speak about that a little. I will be working with my colleagues to launch into that work shortly.
Mr. Good: Well, I will give you a comment, but it's not going to be helpful. The reason is that when you think about what it really is, development effectiveness is such a huge field. I thought I would just run down a list of topics, the kind of things we touch on in our committee on development effectiveness.
But I guess my basic comment would be that you're going to have to choose within that, and choice is not easy. But I must say that almost any of these topics are fascinating, so I'm sure you will enjoy whatever track you choose to go down. It's just that with limited time you do have to choose, and it will be a reflection of your own interests.
In that sense I can't help you. I just want to give you a sampling of some of the areas you might focus on.
The Chairman: Could you leave that list?
Mr. Good: Sure.
First, there is poverty alleviation. ; that is a big issue. I mean, that is ultimately what the bank is supposed to be fixing in developing countries,
There are a number of things you can look at where the bank is doing specific work in things that are called ``country poverty assessments''. A lot of work is going on to actually find out what the situation is in developing countries with respect to poverty.
The bank does a lot of work on what are called ``targeted interventions'' to reduce poverty. That could be looked at.
I mentioned a huge topic: the social impacts of adjustment. That tends to take you into the area of poverty and social things.
I briefly mentioned a different topic. The whole area of microfinance is becoming an increasingly big issue - how it's done, the methods, and so on. As I said, it also tends to be very much a gender, a women- and development-oriented issue for whatever reason, the predilection of women to take advantage of those particular programs.
Let's look at private sector development. If you wanted to focus on it, you could focus on some of the things we touched on at the end, like the IFC. It lends money to the private sector for development, but the development impacts are a little less obvious and require a bit more focus and analysis.
MIGA, the guarantee agency, is coming out with new instruments, new kinds of guarantees, and so on.
There is a whole cluster of issues under the heading of private sector development and its effectiveness as pushed by the World Bank, the IFC and MIGA, not on its own. So there's a nexus of issues there.
What about the environment and sustainable development? How well is the bank doing in those critical areas?
Let's look at women and development. How well is it doing in those critical areas?
There are tonnes of sub-headings.
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There was a question asked at the end about cooperation. How well is the World Bank doing in terms of its cooperation with the IMF, with the regional development banks, or with the UN agencies - as we just discussed - particularly in these post-conflict situations, in Bosnia and Herzegovina, for example, and in the West Bank and Gaza? The World Bank is now getting more involved in those kinds of situations, and it's bringing us into contact with a lot of UN agencies. Again, there are tonnes of questions on effectiveness in those areas.
If you wanted, you could look at institutional change within the World Bank, all the things Wolfensohn is trying to do. I'm not sure I would advise that, but nevertheless you could do it.
This is just to say there are lots of directions in which to go. It seems to me you're going to have to put together a list and choose. I'd be happy to help you choose and help you discuss any of them, but in the final analysis, I guess I don't have anything more specific than that.
The Chairman: Well, that is quite fair, Mr. Good, and I think that was probably sufficient for our purposes this morning, to give us items on the horizon. We will be discussing these items with our colleagues.
I know you have a plane to catch. Just allow me to say a few concluding words on behalf of all of us. We know you were in Canada - in Toronto yesterday - and made changes to your schedule so you could be with us today, so there's a certain short notice for that reason.
Clearly the issues are complex, and if I have a personal agenda, it is to help our fellow parliamentarians - not just those who were able to come, but all parliamentarians - better understand the importance of the IFIs and the importance of change for good. We have a stake in all of these, as do all the peoples of the world have a stake, in one way or another.
You get to Canada from time to time. I'm not saying that every time you're here we would be able to get together. But if we could know, maybe through Jill's office, when you're in town, so that from time to time we could maybe stay in touch as a committee....
Ms Torsney: And slip across the border incognito.
The Chairman: Right. So that we can of course maximize travel cost, inasmuch as you would be coming to town anyway....
For the record, as the chair, I am trying to arrange a visit to the World Bank for three or four days in the latter half of January. The logistics have not been worked out yet, but it is a goal. I've already spoken briefly to Mr. Wolfensohn at the annual meeting and arranged that we will go when he is in town, and we will spend some time with the new president. Certainly by then we will have chosen the specific....
As I say, how we will pursue this is going to be driven by parliamentarians, but it's a top priority with the president. It's a top priority with our government, as evidenced in the interest of the Prime Minister, his interest in advancing the IFIs at Halifax and beyond.
So with that, let me say thank you, Mr. Good, to you and your colleagues for coming to see us today. Safe and happy travels.
Mr. Good: Thank you very much. I hope to see you in Washington.
The Chairman: Yes.
The meeting is adjourned.