FROM THE OFFICE OF PUBLIC AFFAIRS

International agreement achieves landmark reforms with Bush Administration Leadership

Economic assistance to poor countries will be more effective in coming months as a result of Bush Administration reforms achieved today with an agreement to replenish a key international development organization.

The agreement among international donors to replenish the International Development Association (IDA) will require measurable results for the first time since IDA was established nearly forty years ago.

Treasury Secretary Paul O'Neill praised the agreement as a significant change in how donor nations help poor countries succeed.

"This agreement reflects President Bush's determination that our development assistance must achieve results if we really want to help poor people succeed," said O'Neill. "These reforms are taking us in the right direction. They will make a difference in the lives of real people. We insist on measuring results, we deliver grants where grants are most appropriate, and we're putting more emphasis on productivity growth in the private sector. More funding is important - and we're providing more funding."

The agreement, reached earlier today in London, concludes negotiations for the 13^th replenishment of IDA, and provides an additional $23 billion to the organization over the next three years. IDA is the arm of the World Bank that provides development assistance to the poorest countries.

With Bush Administration leadership, donors agreed to the following sweeping reforms: First, IDA will establish a measurement and evaluation system that measures recipient countries´ progress. This will enable donors to link a portion of their contributions to the achievement of results on the ground. In fact President Bush's FY2003 budget request will condition $300 million of its proposed $2.85 billion contribution on achieving results in health, education, and private sector development.

Second, a significant increase in grant funding will now be available for the poorest countries for education, HIV/AIDS, health, nutrition, water, sanitation and other human needs. Secretary O'Neill said, "This agreement fulfills an initiative of President Bush to ensure that more funding is available for investment in poor countries - without adding to crippling debt burdens."

Third, IDA will devote significant resources over the next three years to private sector development in the poorest countries. I will do this by working with the International Finance Corporation. The IFC is the arm of the World Bank Group that provides financial sector products to private sector projects in developing countries.

These hallmark reforms are a significant achievement for the poorest countries and fulfill a pledge by President Bush that the U.S. stand shoulder-to-shoulder with people and countries that are trying to succeed.