James D. Wolfensohn interview about HIPC

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OK, Ronnie, great.

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Firstly, if if you could just tell us why you feel poverty matters, Why should we bother about poverty?

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Well, first of all, if you're poor, you don't like it, that is something that I guess you would feel and that I feel.

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And if you have a sense of trying to make the environment better, make the world better, have a better sense of equity, you have to be concerned about the people that are less well off than you are.

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And what we find at the bank is that the numbers are enormous.

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We have 1,300,000,000 people that live under a dollar a day, have 3 billion people that live under $2.00 a day in a world of 5.7 billion people.

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So the number becomes more than just personal.

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It becomes really an issue of the whole stability of our world, the whole moral justification for creation of wealth, the whole sense of social justice.

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So you start with, I think a feeling that there's a very strong social and moral issue.

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If you're less socially or morally conscious.

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You can also think of it in terms of economic development because the poor ish people in the world, the 4.7 billion in developing countries represent about 20% of the world's growth, national product.

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And that's growing rather fast.

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And so it also creates opportunities for jobs in developed countries like in the UK or the United States or in Europe for exports and for trade.

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So there is an issue beyond the social and moral argument that we should be concerned with.

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And finally, there is the issue that in a world like we're in today, if you have people that are disadvantaged, they're subject to health problems, they get involved in crime and drugs and they become immigrants, they have wars, all those things, as you know, become immediately transferable.

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And the most obvious and immediate 1 is the environment, where if you have a degradation of the environment in poor countries, it affects us in developed countries.

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So I'd say there are the three very good reasons.

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The social and moral is a good business reason, and another very good reason is the world is now wholly interconnected, so we are indeed responsible for our brothers and sisters in other places.

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What is the link between debt relief and poverty?

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Well, debt relief and poverty is is something that I learned from a Muslim Mullah when I was in Mali.

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And.

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He said to me, Mr.

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President, he said, my parishioners come to me and they say, what is the difference if you're helping us, if you put money in one pocket and take it out of the other pocket and you're left with nothing.

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And I started to think about that.

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Why is it that we take it out?

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And of course, the reason is paying off debts.

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So the question is, if you're trying to give development assistance and the money just does a round trip back to the bank, it doesn't really help very much the countries that you're working with.

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So that's the fundamental issue.

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So if you are trying to help countries, you want to try and lower the incidence of their debt and their needs to pay back.

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In some countries, people living today are assuming debts that were brought on to them by dictators in the past for feuds and for fights and for defence expenditures.

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In some cases the money's been stolen, in other cases it's been wasted.

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But if you have a new team coming in that is trying to make things better, if they're burdened with overwhelming debt, there's not much that they can do.

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So the issue of debt forgiveness and possible development is very, very closely related.

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And so we and an initiative called the Hippic Initiative, really tried to see if there was a way of reducing the burden of debt as you would with an individual.

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If an individual has too much debt, you try to help them out so that they can get themselves going again.

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But you need to do it rather carefully, because if you forgive debt to dictators or the people that are wasting resources or who have no plan, just as if you forgive debt to an individual who is drinking or gambling, it doesn't help that much.

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You really need to be careful in the way in which you forgive debt as part of a development process.

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You want to be sure that you forgive debt to countries as you would to people who behave rationally, responsibly, so that the forgiveness of debt can be part of a much broader process of development in those countries.

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And that's in fact what has happened in this marvellous debate sponsored very often by people in Jubilee 2000, by grassroots groups who have really pushed the issue of the debt debate, initially just saying forgive debt, but now coming to a much more mature discussion of debt forgiveness as part of an overall much more complicated and much more meaningful development process now.

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The the the the Hippic initiative relies on very much on a consultative process.

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What are the indications for development as a whole in?

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This well, I think that this process has been very interesting.

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We did the Hippic initiative bit over two years ago already.

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Then there was pressure from religious and other groups for debt forgiveness.

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But The thing is really built up in terms of now the Jubilee 2000 movement.

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I myself have spent a lot of time in the last 2 1/2 years in meeting with religious leaders and with meeting with non governmental organizations.

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And so the first thing is that it has brought about a much closer interchange between the formal international financial bodies such as the bank and the Monetary Fund with members of civil society.

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That's extremely important because the way in which you get action today is not just by civil society alone, not just by governments alone, not just by intermediaries like us, but by a coming together of all those three groups together with the business private sector.

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So this is a very good example of a move to address a very important issue, namely debt, but as part of a broader movement to bring the official institutions, private sector, civil society and the people that are affected together to bring about a solution.

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I think it's a very healthy development and I look forward very much to the continuing debate and to further steps that can be taken.

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The real question is what resources are available, because there are not unlimited resources available for debt forgiveness.

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Of the 40 odd most indebted countries, the outstanding debts probably 150 to $200 billion.

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And that's beyond the dreams of anybody to forgive completely, particularly in a year like this year where the total forgiven, the total work that's being done in development assistance amounts to say $40 billion a year.

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So you can't project five years just using the 40 billion a year just to pay off debt because then nothing else gets done.

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So the really crucial thing is to get a balance to determine how much debt can be forgiven as part of what type of development program.

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Bringing together the players, namely the governments, the international institutions and civil society to try and come together with well planned, well executed programs where the money that is saved really goes to strong social endeavours and helps address the question of poverty very.

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Good, yes.

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Indeed.

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That's lovely.

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OK, thank you.

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I'm very happy that Jubilee 2000 has been OK.

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I'm very happy that Jubilee 2000 has been a movement that has spawned a lot of the discussion on debt.

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That discussion has developed in its intensity and its depth as we've each gotten to know each other.

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And I think now the debate that is going on and the actions that have been taken are a really excellent reflection of the efforts of this very important group in the non governmental sector.

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It's been a grassroots movement when it's been very, very effective.

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And then on the question of what was it, yeah, I mean the overall debt is 200 hundred and 50 to $200 billion.

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And when you compare that with the amount of overseas development assistance which is provided every year, which is of the order of $40 billion, you can't conceive of having five years where all the money that's available for assistance goes to debt relief.

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That would mean that you had a no health programs in Mozambique, no schools in Nepal, no work on relief in Honduras and Nicaragua.

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The demands for development assistance for the 3 billion people that live under $2.00 a day are so enormous that you really need to have a balance in terms of what it is that you can use this development assistance for.

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And that's why there's a need for discussion between all the parties to come out with a rational solution in an overall global development framework.

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That was great.

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Could could we do it?

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Would you mind it once more going in a bit stronger on the overall debt is 200?

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Yeah, We have a situation where the 40 most indebted countries have external debts of the order of 150 to $200 billion.

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If development assistance that's made available every year runs at around $40 billion, then it is impossible to conceive of taking four or five years at which you devote that money only to debt relief.

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You have to think in terms of the other things that need to be done to fix the slums in Jamaica, to deal with the problems of rural Mozambique, to deal with the questions of children dying for lack of of health and injections, for issues of food distribution to people that don't have it, really cutting edge issues which affect life and death.

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One can't conceive of cutting these off for the process simply of debt.

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So you need to have a balance.

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You need to have a balance between what it is that should be done for continuing programs of development and what it is that you can do to relieve past obligations.

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And you have to have a balance.

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It's like a balance an individual has in paying off debt and keeping himself or herself alive.

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It's the same thing with countries where there is a limitation on the amount of resources.

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And so it is that we've got to have an agreement of looking at debt within the framework of an overall development program, which is balanced between what can be done, the needs of the people, the pressures of civil society and the reality of the situation.

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And most important in it all is to ensure that the countries that you give the debt relief to are in fact committed to programs which are socially responsible, so that we can really make a difference on the issue of poverty and equity in our world.

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The generation is going to say unprecedented consultation between the World Bank, NGOs, church groups, civil society from all over the world has created the possibility for real and lasting change.

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The very exciting and new features of this process has been particularly in in the process and in the content.

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In the process we have been using worldwide web.

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We're just going to three processes.

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And look at Tony.

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OK.

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Should I start or?

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OK.

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The very exciting feature of this process has been the content and the results of these consultations.

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First, we have used website consultations and in country meetings to canvas the views of NGOs, church groups and individuals.

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The impact has been tremendous because the results of this consultation process has directly feed into the Board and to the Ministers meeting.

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We have as a result of this process received a mandate for changing the HIPIC initiative, strengthening the features of debt relief as well as a better focus towards poverty alleviation.

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We believe that this type of consultations in the future will help us improving programs like HIPIC, but also programs towards poverty alleviation and we are very encouraged about this process and help NGOs, insurance groups have been giving us during the last couple of months.

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As a result of these consultations, we have made concrete proposals to the World Bank board and the board.

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Oh, sorry you didn't want to have board.

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So OK, yell at me like you said.

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Just like talking to me.

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The results of these consultations have been reflected into an No, sorry because I've OK do you want to take.

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A bit the.

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Results have we?

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Took these results.

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The results of these government decision makers policy makings that is maybe has been.

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Opened up like never before.

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I'm going to go into this.

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Other meeting.

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So the result of this the result.

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Yeah.

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Yeah.

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So Tony, I'll just give you a lead in.

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You had these, you had these consultations, but what's the result of it?

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What's new about it?

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The result of these consultations is a new partnership with NGOs, church groups, as well as a new impact on the decision making process in organizations like the World Bank and the IMF.

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We have benefited from this.

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No, that was going well.

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That was really.

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That was nice.

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Because I want now to get to the lead to the mandate for change.

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Can you?

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Go.

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Can you stop it?

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Now can you stop it and go to the as a result of?

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This What's the outcome of these consultations?

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The result of these consultations is a new partnership, working partnership with NGOs, Church group and those are individuals concerned about that.

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The second impact of these consultations is their impact in the decision making process in organizations like the World Bank, the IMF and other organizations.

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What we have seen during the April meetings of ministers here in Washington is is that largely as in the result of this consultation process, we have received a mandate for changing the Hippic initiative and we expect over the next couple of months to to provide a new framework which facilitates broader, deeper and faster debt relief to the poorest developing countries that.

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Was pretty.

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Good before change decisions are.

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Made both organizations you.

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Make in order.

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Within the World Bank and the Hippic Initiative.

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That's that's the key thing, an impact on the way decisions are made.

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That is what you want to convey.

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But is this decisions for who?

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Decisions for the wait.

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One second.

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As a result of these consultations, we have established a new working relate.

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Let's take it.

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OK, Tony, again, let's.

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Give you.

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An OK excellent turn up.

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In your.

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Office, OK, OK.

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What is the outcome of this consultation?

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What's new about?

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It as a result of these consultations, we have a new working relationship with these partners.

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These partners have helped influence decisions in institutions like the World Bank and IMF in improving the Hippic debt initiative.

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Ministers in their April meetings here in Washington have endorsed A mandate for changing this initiative and we expect that a new framework will provide broader, deeper and faster debt relief in the months to come to the poorest countries.

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Excellent.

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That was good.