The themes and areas for action emphasized by the World Bank find a good reflection in the outcome of the recently concluded G-20 summit in Seoul, Korea. The main theme of the report submitted by the Bank - that in a progressively multipolar world economy, the goals of global growth, rebalancing, and development are increasingly interconnected - had good resonance in the summit discussion. The point was made by several leaders, some echoing verbatim the report's message that rebalancing "should not be a zero-sum game, rotating demand from one to another", that the "objective is to lift growth, not just shift growth", and that "developing countries can be an important source of new demand for stronger and more balanced global growth" (words from para 2 of the report's executive summary). For example, UK's prime minister David Cameron said exactly that. India's prime minister Manmohan Singh made the same point, echoed also by presidents Hu Jintao (China), Lula (Brazil), and Zuma (South Africa).
World Bank president Zoellick used the same theme to frame his presentation at the summit plenary, where he also emphasized infrastructure, food security, implications of financial regulatory reforms (e.g. Basel III) for developing countries, and IDA. Bank managing director Mohieldin, speaking at the G-20 Finance Ministers' dinner, conveyed similar messages.
In the summit communiqué, development issues are covered both as part of the Framework for Strong, Sustainable and Balanced Growth (Seoul Action Plan) and - in more detail - as part of the Seoul Development Consensus for Shared Growth. The latter is the outcome of the work of the G-20 Development Working Group, in which the World Bank participated actively, and includes a Multi-Year Action Plan on Development covering actions in nine areas or "pillars": infrastructure, human resource development, trade, private investment and job creation, food security, growth with resilience, domestic resource mobilization, knowledge sharing, and financial inclusion. The World Bank's role is noted in all of these areas.
Currencies and external imbalances generated the most (contentious) discussion and the most media coverage. At times, that discussion seemed to take place mainly between the G-2 (US and China). The initial US proposal to establish quantitative ceilings on external current account imbalances did not make it into the communiqué. Instead, further work will be done in coming months, under the G-20 Growth Framework Working Group with inputs from the IMF and other international organizations, to develop indicative guidelines and indicators that could serve as a mechanism to facilitate timely identification of large imbalances that require preventive/corrective action. Similarly, communiqué language relating to exchange rates proved quite contentious. The communiqué calls for refraining from competitive devaluation (as did last month's G-20 Ministerial communiqué), but the proposed addition of "competitive undervaluation" to that call could not muster consensus and was eventually dropped.
These issues are likely to continue to be a major focus of the G-20 under the French presidency (France takes over from Korea after the Seoul summit). Indeed, President Sarkozy, in outlining the areas of focus under the French presidency, noted that France would like to broaden the discussion to include the reform of the international monetary system, including issues relating to the international reserve system. France would also like to focus more on the functioning of commodity markets. France indicated its commitment to take forward the work on development initiated by Korea under its presidency (i.e. the Seoul Development Consensus and the related multi-year action plans).
Looking ahead, for the Bank, two key channels of engagement with the G-20 will continue to be: (i) the Framework for Strong, Sustainable, and Balanced Growth and related Mutual Assessment Process (MAP), which now has a still broader mandate and the work envisaged on guidelines/indicators relating to imbalances will be carried out under its auspices; and (ii) the Development Working Group, which will oversee follow-up to the Seoul Development Consensus and action plans.
The Bank report prepared for the summit as part of the G-20 Growth Framework/MAP was publicly released by the G20 at the conclusion of the summit (posted on the summit's website) and the Bank simultaneously posted it on its external website. The Bank's contributions to the G-20 process were very well recognized and appreciated.
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