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The WORLD BANK, in response to Finland's earlier question, pointed out that its third Annual Conference on Environmental Sustainable Development is due in September and will consider financing sustainable development and focus on innovative methods. The Bank supports the Matrix and would be willing to provide support for further work on it. The Bank has undertaken studies on the relationship between macro-economic policies and environmental protection. The Bank has various initiatives it has undertaken related to sustainable development: there are studies in some developing countries related to the potential to phase out ozone depleting substances; a paper is being prepared on resource mobilization in biodiversity-related issues; and the proposed renewable and conservation fund of the IFC will assist the COP of the Climate Change Convention on the issue of tradeable permits.

COLOMBIA asked to what extent the creation or establishment of environmental policies by World Bank users and the introduction of reforms by those countries are required for World Bank funding. He also asked how one can coordinate national environmental plans and programmes that result from cooperation between banks and recipient countries.

The WORLD BANK responded that Bank loans are a product of a lengthy discussion process to ensure that the project or policy in question achieves what it set out to do. No amount of good will and resources can induce or encourage players within a sector to act when the rest of the policy framework encourages them to do otherwise. The Bank discusses ways that the project itself can be successful and promotes polices that will let this happen.

PAKISTAN noted that structural adjustment programmes (SAPs) have been seen to have negative impacts on the pursuit of activities that would be beneficial to the environment. SAPs show an unfortunate tendency to accentuate impoverishment. What is the World Bank's policy towards this? With regard to putting in place infrastructure development programmes that are required, what is the World Bank's feeling about funding these contradictory impulses in development programmes?

The WORLD BANK responded that the Bank has looked for ways to ensure that the damage is removed and its environmental assessment programme screens all projects for their potential environmental damage and mitigation plans are developed.

The IMF responded that when they go to a country that has a massive fiscal deficit, high inflation, high unemployment and lack of growth, they advise the country to reduce its deficit. The IMF makes suggestions about how to cut expenditures, but these are usually rejected by national authorities. The IMF and the World Bank go back to Washington and ask the concerned government to call when it has made up its mind. What finally gets cut are subsidies and social and education expenditures. Then come the NGOs who complain about what the World Bank and IMF are doing. They do not realize that this is a process of negotiation and the decision is up to the national authorities, not the IMF.

FRANCE, on behalf of the EU, proposed that the Chair's report include the following: (1) the Working Group lacks the competence to address the issue of debt, and bilateral debt issues should be considered in the context of the recent Paris Club meeting; (2) IFIs have provided responses to questions and we do not want to seek additional contributions from them on sustainable development and then accuse them of imposing new types of conditionalities; (3) in resource mobilization, there is need to reflect on the balance between national and external resources, but government and public funding could offer conditions conducive for private flows; (4) regarding mechanisms, in order to supplement the conventional ones, we should approach innovative mechanisms with an open mind; (5) the user charge on air transport needs to be studied scrupulously, taking into account the economic and fiscal implications; (6) capacity building and other supporting measures for technology should be underscored when addressing the financing of sectoral and cross-sectoral issues; and (7) another working group is addressing the issues of farmers rights and indigenous technology and we should be wary of linking them to intellectual property rights. He proposed the addition of a new paragraph that provides for a reconsideration of the work programme to avoid further repetition of work.

The PHILIPPINES, on behalf of the G-77 and China, expressed bewilderment at the tenor of France's remarks. To indicate what the Chair should or should not report is astounding. The Chair has listened to the discussions and noted that there are some areas of agreement and some areas of disagreement, but there has been a dialogue and the summary should reflect this. He noted the following: (1) the need for analytical judgement of assumptions, impressions and assertions; (2) the need for symmetry, for example when we talk of forests, we are not only referring to tropical forests, but also to boreal and temperate forests; (3) the need to list financing and technology transfer measures adopted and implemented by developed countries; (4) the need to consider and respect specific national conditions; and (5) the need to relate new, innovative financial mechanisms to poverty eradication, social integration, productive employment and total development. He also made the following recommendations: (1) enhance access to markets, including technological markets, and improve as much as possible the terms of trade of developing countries; (2) further reduce debt or agree on a final solution for the debt problem through cancellation mechanisms recommended by the non-aligned movement; (3) meet ODA targets; and (4) enhance capacity building in developing countries by living up to the commitments in Chapters 33 and 34.

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