The Hindu : `Poverty elimination within reach'

Online edition of India's National Newspaper
Monday, Apr 22, 2002

International

International

`Poverty elimination within reach'

By Sridhar Krishnaswami

Washington April 21. The Union Finance Minister, Yashwant Sinha, has argued that for the first time in the history of humankind, if there was collective international will, "the goal of putting an end to absolute poverty appears to be within our grasp". All that is required is an action programme backed by a firm commitment by nations.

In his statement at the 56th meeting of the Development Committee here today, Mr. Sinha stressed on what it took to come to grips with ridding poverty. "The tools that science and technology have placed at our disposal makes the achievement of this hitherto unattainable goal easier. Global wealth and prosperity are at an unprecedented peak. All that is required is an action programme to which there is firm commitment of all nations."

Mr. Sinha touched on several aspects of the challenge confronting the international community and the developing nations, in particular, and also those before major international financial institutions. One of the first things he addressed was the issue of "crisis prevention". He pointed out that while a certain amount of volatility in growth rates was inevitable, sudden reversals of investor confidence has had a devastating impact on the poor. "The international community has an obligation to put in place mechanisms to address this critical issue. Further, if even after all efforts a crisis does hit an economy, we must have effective mechanisms for the quick, orderly and effective resolution of the problem."

The developing countries, Mr. Sinha said, were particularly vulnerable to international capital flows and excessive volatility of oil prices. On the one hand, the world economy seemed to have pulled away from the precipice of recession, but on the other the emerging economies would be particularly hit hard by sharp increase in energy prices. "While developing countries require to build up their capacity in risk management, there is also a need to strengthen global institutional arrangements to put in place a stable price mechanism." Calling for an increase in the transfer of real resources to the developing countries, he stressed that the sharp fall in the IBRD lending commitments, from about $22 billion in 1999 to 10.5 billion in 2001, had to be reversed.

"We hope that IDA deputies will quickly agree on a substantially enhanced IDA-13 replenishment. This will be crucial in achieving the Millennium Development Goals." Mr. Sinha also touched on the issue of market access by the developing world and the impact of this on the successful implementation of the Doha Development Agenda.

"Industrial countries form 80 per cent of the market for goods produced by the developing countries. The denial of market access and the continuance of high protection in labour intensive sectors by developed countries have to be reversed. These are the areas in which poor countries have the greatest comparative advantage and which have the greatest potential for poverty reduction." He pointed out that it was not just a question of quotas and tariffs that stood in the way of access by developing countries. "The high degree of agricultural subsidies in rich countries... dwarfs ODA flows six times over. These are huge impediments to improving the prospects of poverty reduction."

Mr. Sinha pointed out that while 26 countries were now benefiting from the Heavily-Indebted Poor Countries (HIPC) initiative, the experiences from its implementation were not uniform. India, he announced, had decided to participate in the initiative. "We have decided to cancel the bilateral debt owed to us by the HIPCs. We will also extend all possible assistance to facilitate a dialogue between commercial creditors and the HIPC countries."

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