Managing Director for Global Operations, Sri Mulyani Indrawati, recently represented the World Bank at the Asia-Pacific Economic Cooperation (APEC) Finance Ministers Meeting in Moscow―a dynamic regional platform where 21 members consisting of middle and high income countries engage on issues of trade and economic cooperation. Russia, which took over the APEC presidency this year from the US, hosted this annual gathering of finance officials against the backdrop of global economic uncertainties. Prior to that in June, Sri Mulyani took part in a lively debate on the global economy at the International Economic Forum in St. Petersburg, also known as “Russia’s Davos.” We sat down with her to find out what was on the minds of policymakers from emerging economies and about the World Bank’s engagement with middle income countries like Russia.
You have just returned from the APEC Finance Ministerial in Moscow. Can you tell us why this forum is important and how the World Bank contributed?
Not surprisingly, APEC finance ministers were preoccupied with three challenges weighing on the global economy today, namely the European debt crisis, the slowdown in emerging economies like China and India, and the possibility of deep spending cuts in the US later this year. To add to that, the recent hike in food prices has placed increased pressure on government budgets, threatening the livelihoods of the poor. While APEC economies have weathered the global slowdown relatively well, the finance ministers pledged to step up intra-regional cooperation and build on the region’s strong foundation for growth. This includes investing in the region’s infrastructure and improving fiscal sustainability, among others. So the forum is clearly an important vehicle for policy makers―from Malaysia to Mexico―to have frank conversations and to coordinate policies.
The World Bank has played a critical role behind the scenes in supporting global processes like the APEC, G20, and G8 to articulate a strong, credible agenda, and to foster the development dialogue, or the St. Petersburg Forum, where we provide expertise and knowledge, and work with the host government on a variety of challenges. At APEC, for example, the World Bank worked with our Russian counterparts to put on the table topics they believed were important priorities such as financial literacy, fiscal sustainability and disaster risk management. We also drew on our global knowledge and engaged with fellow panelists representing other institutions (such as the IMF) and governments. I spoke in two sessions―one on fiscal sustainability and growth and the second on financial policy measures to address the impact of natural disasters.
Why are middle income country clients―like Russia― important to the World Bank?
Many of our clients and shareholders have already acquired or are reaching middle income status. This is impressive progress on their part and presents both a challenge and an opportunity for them and for us. Challenge because as countries acquire middle income country status they demand better and more sophisticated services from us. We need to adapt to this demand. Seventy percent of the world’s poor live in middle income countries, so we cannot afford not to adapt if we are to fulfill our goal of a world free of poverty. Middle income countries are also important growth poles at a time when high-income countries are struggling with fiscal and financial sector issues, and they are contributors to global public goods. There are real opportunities for us because we can learn from how these countries have progressed. There is scope for different modalities of learning and engagement, for example South-South learning. Partnering with middle income countries also moves the World Bank along the development practices frontier, bringing the opportunity to innovate in finance, instruments and knowledge in the service of the client.