Speakers:

Mark Sundberg, Lead Economist, Development Economics, World Bank
Punam Chuhan, Lead Economist, Development Economics Vice Presidency, World Bank
Brian Levy, Advisor, Poverty Reduction & Economic Management, World Bank
Discussants:

Paolo de Renzio, Research Fellow, ODI
Julius Court, Research Fellow, ODI

Chair:

Simon Maxwell, Director, ODI

Simon Maxwell, Director of the Overseas Development Institute (ODI) opened the meeting, introducing the Global Monitoring Report and the speakers from the World Bank (Mark Sundberg, Punam Chuham, Brian Levy) and from ODI (Paolo de Renzio, Julius Court).

Mark Sundberg explained that the Global Monitoring Report (GMR) is published by the International Monetary Fund and the World Bank. Its purpose is to monitor the implementation of commitments made by developing countries, developed countries, and the international financial institutions in the Monterrey Consensus of 2002. The six main messages of the 2006 GMR are that:

• Favourable growth - with good growth in developing countries - has helped reduce poverty, but more even and accelerated progress requires strengthening of infrastructure and national investment climates.

• Recent progress in human development outcomes points to the need for more flexible aid, better coordination, and improved governance.

• Major aid and debt relief commitments were made in 2005, but better aid and vigilant monitoring are needed to guard against risks to their effective implementation. Trade reform needs new life.

• The focus of the international financial institutions (IFIs) must shift from managing inputs to achieving real results on the ground. This poses major challenges to both the IFIs and developing countries.

• Governance should be regularly monitored to help track progress, generate greater accountability, and build demand for further progress.

• The international community must support efforts to strengthen governance systems through ratification and support for global checks and balances eg. international law enforcement, anti-corruption treaties, international transparency initiatives.

Punam Chuham provided further detail on the progress made by developed countries in 2005 on aid and debt relief, and on the risks to the implementation of these commitments, and on the lack of progress on trade:

• On aid, developed country donors agreed to increase substantially aid to developing countries, and in particular to sub Saharan Africa, by 2010. They also agreed to make improvements in aid quality, under the Paris Declaration.
  But, risks and question marks remain, around whether donors will meet their commitments both in terms of aid quantity and quality.

• On debt too, good progress was made with the Multilateral Debt Relief Initiative, but questions remain around whether recipients will reap the benefits of debt relief, and be able to maintain sustainable debt levels in the future.

• On trade, more needs to be done if the WTO's "Development Round" is to be concluded successfully.

• In each of these spheres - aid, debt relief and trade - mutual accountability necessitates careful monitoring of progress towards commitments.

Brian Levy introduced the GMR's concept of "national governance systems" which are made up of a series of actors, their relationships, and the outcomes which the system produces. This conceptualisation emphasizes a range of issues:

• Governance is multi-dimensional.

• Corruption is one possible output of governance systems, but there are other possible outputs; governance is not the same as corruption.

• "There is no unique path to "good governance". Rather, there are different trajectories.

• It is important to monitor various dimensions of governance. Indicators are available.

• "Good things do not always go together". Countries might do well in terms of producing sensible policies, whilst failing to tackle corruption eg. Bangladesh.

• There is a need both for broad and aggregated indicators and for specific and disaggregated ones.

Paolo de Renzio of ODI made four sets of points:

• On aid quality: To improve aid quality it is important to understand the incentives and politics which lie behind the way in which aid is delivered, and alter them, rather than simply calling for more flexible and predictable aid.

• On mutual accountability: There is a paradox in that it is developing countries rather than donors who are particularly keen to see mutual accountability, but it is the donors who have the power in the aid relationship, including the power to deliver mutual accountability.- On the role of donors: We don't know enough about what might work.

• Next year's GMR should perhaps say more about donor accountability / answerability, about developing countries' perspectives, and about the political economy of mutual accountability in aid.

Julius Court welcomed the report, emphasizing the importance of governance and monitoring governance, and made three additional sets of points about monitoring governance:

• On the approach taken to governance by the GMR: it is good that the World Bank/IMF is saying more about politics, but the GMR's approach to governance might be rebalanced to pay attention to legitimacy and democracy as well as to corruption and transparency.

• On indicators: there has been good progress on developing indicators for governance, but assessments need to be rigorous and comprehensive.

• On aid and governance: they should be, and will be, linked by donors, because this can encourage governance reforms, and because taxpayers in donor countries will want to know that their aid is being used effectively.

Questions and comments from the floor covered a wide range of issues, including the following:

• Why doesn't population growth feature in the GMR? Is this because the MDGs don't include targets on population growth? (This is a reasonable question; population growth and trends are clearly very important, particularly in relation to AIDS and its effect on the productive population. It is an issue that the report considers, but not in detail and something that the Bank is intending to look into further.)

• Why doesn't the GMR say anything about the sustainability or otherwise of oil-dependent growth? (This is a good point, although it may not be the case that increasing oil prices will have uniformly negative impacts on developing countries. Nevertheless, attention does need to be paid to this issue.)

• Given the data gaps identified by the GMR, how robust is the GMR's analysis? (There are data problems; the GMR does what it can with the available data.)

• Enhancing aid quality requires tackling the incentives and politics in donor countries which have led to - according to the analysis of ActionAid - much aid being ineffective "phantom aid". There is also a need for more political pressure for change in recipient countries as there is a danger that increased levels of aid will lead to further problems of accountability.

• There is a need for transparency and accountability on both sides of the aid relationship, for instance in relation to extractive industries. (Yes, mutual accountability does require mutual transparency and monitoring.)

• Does a focus on indicators distract attention from the underlying politics? (No, a dual focus on both indicators and politics can be helpful.)

• Are there specific guidelines for governance indicators that countries must fulfill to show that they have made progress. (No, there is not a core set of indicators, rather they are developed on the basis of the situation in a specific country.)

In conclusion, Mark Sundberg reiterated that the world is failing in terms of progress towards the MDGs, governance needs to be brought more centrally into the debate.