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January 27, 2005
js-2212 Statement on Getting the Millennium Development Goals Back on Track
John B. Taylor, Under Secretary for International Affairs
United States Department of the Treasury
Davos, Switzerland
January 27, 2005
Thank you for inviting me to participate in this discussion. Since we are here to talk about "getting the millennium development goals (MDGs) back on track," the first question one must ask is why they are off track, particularly in Africa. In my view, a significant part of the answer has to do with the lack of measurable results. What gets measured gets done, and my experience has been that aid is increasingly being delivered in a way that is disconnected from the results we are trying to achieve. Donors and recipients share responsibility in this. For example, donors are engaging in budget support operations without demanding a serious effort to measure how those resources result in progress toward meeting the MDGs. On the recipient side, the Poverty Reduction Strategies -- which serve as the basis for budget support operations – are very weak when it comes to results measurement. I have traveled to developing countries throughout the world and visited many development projects, and I am still amazed, and frankly disappointed, at the unevenness of the results measurement efforts. Getting the MDGs on track will require all of us to aim development assistance squarely at the goals themselves, and to focus on tangible results that will allow us to chart our progress.
The report from the Millennium Project, Investing in Development: A Practical Plan to Achieve the Millennium Development Goals, takes a serious look at the steps the international community should take to deliver on time-bound development targets. The report's attention to an entrepreneurial private sector as an essential element for development is laudable. I am especially pleased by the forceful call for directing aid towards countries that have established a track record of governing both justly and wisely. Targeting such good performers has many merits. First, and as the report notes, quality of governance and a commitment to sound economic policies are necessary preconditions for any country that hopes to undertake and sustain the ambitious investment programs that are necessary to achieve the MDGs. In the absence of those preconditions, both donor resources as well as precious recipient country resources are likely to be wasted. A policy of targeting good performers can also provide other countries with strong incentives to govern more justly and wisely by further increasing the economic rewards to be gained through reform.
Indeed, the considerations that underpin the report's call for targeting "MDG fast-track countries" are precisely the same considerations that persuaded us in the U.S. to introduce the Millennium Challenge Account (MCA). The MCA is one of the only instruments in place that systematically directs aid to poor countries that, despite their economic condition, exhibit both quality of governance and a commitment to sound economic policies and investment in their people. The concessional windows of the multilateral development banks have a somewhat similar performance-based system in place; countries that rank higher on their Country Policy and Institutional Assessment (CPIA) indicators receive, all else being equal, a larger allocation of funds. We have been urging the World Bank to adopt the transparency standards of the MCA in its Country Policy and Institutional Assessment (CPIA) indicators so countries have clear incentives to improve and to hold the World Bank more accountable for its ratings. We have also worked to ensure that the weight of governance remains high in the calculation of those indicators. To reduce the weight of governance would reward countries like Zimbabwe at the expense of countries like Tanzania.
Regarding the relationship between aggregate aid flows and MDGs, the United States has significantly increased ODA, but we think that it is simply impossible at this point in time to forecast how much will ultimately be required and disagree with the concept of specific ODA targets. Aid is just one of many important inputs to development, and the amount of aid that will be needed to meet the MDGs will depend critically on the quantity and quality of the supply of these other inputs. Indeed, the argument for targeting good performers grows out of the recognition that aid is most effective when coupled with good governance, and sound policy.
As we increase aid to poor but well-governed countries, it is particularly important that we do not cripple them with debt in the process. Through the increased use of grant funding to these very poor countries as they work to achieve sustainable development, we can help them to break free of recurrent "lend and forgive" cycles. Such cycles are signals of poor governance on the part of donors and recipients alike, and more importantly, can act to stifle the investments that are necessary to achieve growth. I am pleased to see that the report endorses the use of grants to the poorest countries.
The report mentions the need for countries to live up to the Monterrey Consensus commitments. In fact, the U.S. committed to increase our ODA by 50% from 2000 to 2006 and it was already up by 60% through 2003. In Sub-Saharan Africa, the U.S. has more than quadrupled its aid contributions in just three years alone, from $1.1 billion in 2000 to over $4.6 billion in 2003. As part of our concerted efforts to combat the specter of HIV/AIDS, the U.S. committed $1.2 billion in bilateral assistance for 2003, or $800 million more than the next largest donor. In FY 2004, the total U.S. budget for international HIV/AIDS programs was $2.4 billion and the U.S. is the largest investor in the Global Fund. With the help of our development partners, the U.S. is spearheading the global effort to eradicate Polio, having committed roughly $1 billion and now leading the way in mobilizing support for the World Health Organization's Polio Eradication Initiative.
None of these increases in assistance will be sustainable, and talk of even greater increases will be unrealistic, without measurable results. In my own experience, the best way to encourage more generosity from U.S. taxpayers is to provide them with clear evidence of results. Moving forward, we will need to present increased development assistance as a clear means towards an end rather than as an end in itself. This will require us (first) to define clear objectives for development funding and (then) to identify demonstrable results associated with those objectives. In addition to helping us persuade U.S. taxpayers, our efforts in this vein will teach us to use aid more effectively by providing the opportunity to evaluate and draw lessons from what works and what doesn't work.
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