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Development Committee Statement by Secretary Mnuchin | U.S. Department of the Treasury

Development Committee Statement by Secretary Mnuchin
October 13, 2018

Bali – U.S. Treasury Secretary Steven T. Mnuchin issued the following statement at the Annual

Meeting of the Development Committee of the World Bank and International Monetary Fund:
I want to thank the Government of Indonesia for hosting the Annual Meetings of the World Bank
and the International Monetary Fund. I appreciate the warm hospitality that our Indonesian
hosts have extended. I o er my sincere condolences to those a ected by the recent earthquake
and tsunami in Sulawesi, especially to the family members of those tragically lost. The
international community, including the World Bank Group, should stand ready to assist
Indonesia with both the immediate recovery, as well as long-term rebuilding and investments in
disaster preparedness. I ask friends of Indonesia to do what they can, and the United States will
continue providing logistical and other assistance as we continue our coordination with
Indonesian authorities.

Implementation of pro-growth policies has supported continued expansion of the U.S.
economy. In turn, the strength of the U.S. economy has contributed to global growth and a
brighter outlook for investment and private-sector job creation. This should help raise
productivity and growth over the medium term. However, the global expansion is not as
widespread as it was when we met six months ago, and some countries face financial volatility
resulting from domestic vulnerabilities and external pressures. In order to establish a secure
foundation for strong and broad-based growth across the global economy, countries must act
decisively to strengthen economic policy frameworks and pursue sound monetary policies to
address macroeconomic and financial vulnerabilities. They must also pursue structural reforms
that will generate meaningful increases in median household incomes.
I look forward to engaging with my colleagues to promote a strong development agenda that
focuses on improving the conditions for private sector growth, prudent macroeconomic
management, and the rule-of-law. We note the importance of enhanced energy security and
access to boost growth and alleviate poverty. Targeted investments in health and education,



Development Committee Statement by Secretary Mnuchin | U.S. Department of the Treasury

and a greater focus on women’s economic empowerment are also critical to strong economic
growth. The Women Entrepreneurs Finance Initiative (We-Fi) is a powerful example of the
United States’ broader e orts to empower women worldwide to fulfill their economic potential,
and in doing so, create conditions for increased stability, security, and prosperity. We welcome
the successful first round of funding allocations for the We-Fi and look forward to the second
call for proposals.

The transformative set of reforms decided at the Spring Meeting are aimed at strengthening the
financial discipline of the International Bank for Reconstruction and Development (IBRD) and
devoting a greater proportion of World Bank Group resources to poorer and more vulnerable
countries. The IBRD loan price increases and sta compensation reforms that went into e ect in
July were important initial steps in implementing the reform and capital package. Going
forward, robust implementation of IBRD commitments on the financial sustainability
framework and more meaningful application of the graduation policy will be critical. The Board
of Directors should ensure that the financial sustainability framework establishes a crisis bu er
that is su iciently large to allow the IBRD to meaningfully respond to regional or systemic
shocks without seeking additional shareholder capital or reducing the transfer of IBRD
resources to the International Development Association (IDA). On graduation, the IBRD must
credibly assess the graduation-readiness of eligible countries and focus engagement on
addressing the constraints to graduation per the established policy. For IFC investments in
those countries, a higher threshold for determining financial additionality should be applied.

High and rising debt levels in emerging and low-income countries continue to be a key risk to
global growth and sustaining progress on development outcomes. The World Bank and IMF
have key roles to play in addressing these issues by assisting countries with enhancing domestic
resource mobilization, improving the e iciency and e ectiveness of public expenditure,
developing more robust reporting standards, and strengthening countries’ institutional capacity
for assessing and managing their own debt-related risks. To this end, we strongly support the
World Bank and IMF multi-pronged work agenda to enhance public debt transparency and
sustainability and look forward to its full implementation. Improving the transparency and
comprehensiveness of debt data as it relates to publicly guaranteed and contingent liabilities is



Development Committee Statement by Secretary Mnuchin | U.S. Department of the Treasury

critical for more e ective debt sustainability assessments and policy responses to debt-related
risks. The United States stands ready to support countries’ e orts in this regard.

IDA-18 included a wide range of reforms. The forthcoming IDA Mid-Term Review is a welcome
opportunity to do an initial stocktaking of those reforms and begin work on how we can build
on them. Donors should consider how IDA can better ensure debt sustainability among IDA
recipients and discuss improvements to the transition process for countries to moving from IDA
to IBRD. We will continue to support IDA’s prioritization of assistance for states experiencing
fragility, conflict, and violence. We also look forward to the upcoming discussions on revising
the World Bank’s Non-Concessional Borrowing Policy and enhancing the Bank’s response to
countries taking on potentially unsustainable external debts.

As part of the capital increase related reforms and the IDA-18 replenishment, the World Bank
Group is scaling up operations in higher-risk environments, including countries experiencing
fragility, conflict, and violence. Managing these risks e ectively and achieving the desired
development impacts will require rigorous implementation of the new safeguards regime, the
Environmental and Social Framework, which started on October 1. At the same time, the World
Bank Group’s independent accountability mechanisms – the O ice of the Compliance Advisor
Ombudsman (CAO) at the IFC and MIGA, and the Inspection Panel at IBRD and IDA – must also
be in the best position possible to fulfill their mandates and provide adequate redress,
especially for vulnerable communities. To this end, I look forward to the Executive Board’s
approval of a range of important reforms to the Inspection Panel later this month, including
approval of monitoring and dispute resolution functions, and the launch of an external expert
review and reform process of the CAO later this fall. The United States also sees the need to
strengthen the system of accountability for contractors further by expanding the list of o enses
open to sanction to include acts of gender-based and other forms of violence in World Bank
Group financed projects. Given recent high profile cases where gender-based violence occurred
in World Bank projects, we would like to see a formal process for developing the new sanction
launched as soon as possible.




Development Committee Statement by Secretary Mnuchin | U.S. Department of the Treasury

We broadly welcome the IMF and World Bank Group’s work to enable responsible financial
innovation and increase financial inclusion. We support the Bali Fintech Agenda given its stated
purpose as a summary of high-level issues for consideration by member country authorities. In
particular, it is important to reiterate that the agenda does not aim to provide specific guidance
or policy advice. We urge the World Bank Group and IMF to focus on work that falls within their
respective mandates, such as monitoring fintech developments and sharing information, and
refrain from duplicating work that falls within the remit of standard-setting bodies or promoting
relatively untested regulatory regimes across their membership.



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