A year of the turnaround: financial plans alone are not sufficient.(The World Bank Group Pres. James D. Wolfensohn speech)(Transcript)

Address by JAMES D. WOLFENSOHN, President, The World Bank Group

Delivered to the Annual Meeting of the IMF and the World Bank Group, Washington, D.C., October 6, 1998

This is the fourth time I stand before you as President of the World Bank Group. At the outset I would like to express my appreciation to our Chairman, Wolfgang Ruttenstorfer, and to my colleague and friend, Michel Camdessus for the partnership that we have enjoyed during the past year.

I would also like to pay tribute to the work that the Fund has done in a year that has been characterized by great turmoil and acknowledge the contribution which Michel and his colleagues have made dealing with very difficult problems at a very difficult time. We all recognize that we meet under the shadow of a global crisis. We come here in a united endeavor to protect the common welfare, to listen to ideas from all quarters, to reach out to friends and critics alike to find new solutions. We must embrace the bold.

Mr. Chairman, I stand before you today under very different circumstances from last year.

Twelve months ago, we were reporting global output that grew by 5.6 percent; the highest rate in 20 years. Twelve months ago, East Asia was stumbling, but no one was predicting the degree of the fall. Twelve months ago, South Asia, home to 35 percent of the world's poor, was still nuclear test-free, and seemed set to enjoy future years of 6 percent growth. Perhaps more. Twelve months ago, developing countries as a whole were on a path toward strong growth over the next decade. Twelve months ago there was optimism about Russia with its strong reformist team.

And then came a year of turmoil and travail.

East Asia, where estimates suggest that more than 20 million people fell back into poverty last year, and where, at best, growth is likely to be halting and hesitant for several years to come. Russia, beset by economic and political crisis; caught between two worlds, two systems, comfortable with neither. Japan, the world's second largest economy, so crucial to East Asian recovery, with a government committed to economic reform, and yet still in recession, with a profound impact not just in Asia but around the world. Nuclear tests in India and Pakistan. War threatened in Eritrea and Ethiopia. Terrorist bombs in Kenya and Tanzania.

And all this compounded by the impact of El Nino; the worst in history - with its full devastating force falling most heavily on the poor. In Bangladesh, floods that kept two-thirds of the nation under water for more than two months, setting back many of the recent social and economic gains. In China, flooding of the Yangtze River region with an estimated 3,500 deaths, 5 million homes destroyed and 200 million lives dislocated.

Mr. Chairman, I have spoken in the past about images of hope; of people from the slums of Brazil to the rural villages of Uganda, from the Loess plateau in China to the hundreds of thousands of women who are finding their dignity through microcredit. People empowered to take charge of their destinies.

But today I have other memories. Dark, searing images of desperation, hopelessness and decline. Of people who once had hope, but have it no more.

The mother in Mindanao, pulling her child out of school, haunted by the fear that he will never return. The family in Korea, with a mid-size scrap metal business, made destitute through lack of credit. The father in Jakarta, paying a money lender 3 times in interest what he can make that day, falling deeper and deeper into debt. Not knowing how he will ever work himself free. The child in Bangkok, now condemned to work the streets, a child no longer.

Today, while we talk of financial crisis; 17 million Indonesians have fallen back into poverty and across the region a million children will now not return to school.

Today, while we talk of financial crisis; an estimated 40 percent of the Russian population now lives in poverty.

Today, while we talk of financial crisis; across the world, 1.3 billion people live on less than $1 a day; 3 billion live on under $2 a day; 1.3 billion have no access to clean water; 3 billion have no access to sanitation; 2 billion have no access to power.

We talk of financial crisis while in Jakarta, in Moscow, in Sub Saharan Africa, in the slums of India and the barrios of Latin America, the human pain of poverty is all around us.

Mr. Chairman, we must address this human pain.

We must go beyond financial stabilization. We must address the issues of long-term equitable growth on which prosperity and human progress depend. We must …