Address by Mr Herbert Jaeger
Alternate Governor for Austria

IFAD 27th Session of the Governing Council
Rome, 18-19 February 2004-02-19

Governors,
Mr President,
Ladies and Gentlemen,

It is a great pleasure and privilege for me to attend the 27th Session of the Governing Council at IFAD.

When looking back to the milestones reached over the past year what comes to mind first is the entry into force of the Sixth Replenishment of the Fund. The financial basis for the work period 2004 to 2006 is now established and the institution can fully concentrate on its mission, poverty reduction for the rural poor and increase of food production. In this context, we also appeal to those donors that have not yet made their commitments to do so in order to strengthen the financial position of the Fund.

There is a broad consensus that the Fund’s objective must be embedded in the concept of attaining the Millennium Development Goals. IFAD with its special mandate and focus on the rural poor is best suited to play an important role in achieving the MDGs, i.e. halving the number of the absolute poor until 2015.

In order to maximise the impact of IFAD’s aid efforts, members have agreed to apply performance criteria to funding allocations. Recipients which demonstrate a commitment to govern justly, to invest in their people, and to encourage economic freedom should be rewarded by more frequent support from the institution. We fully support this approach as an appropriate way to distribute the scarce resources of the Fund among the recipient countries. We expect IFAD to start implementing the performance based allocation system in accordance with the agreed schedule.

In the current year, IFAD will start its Field Presence Pilot Programme. This will be a major step forward for the institution. With own field offices and personnel the Fund will be closer to its recipients and their needs and aspirations. It will also lead to increased feed back through lessons learned from closer cooperation with the implementing institutions. Consequently, it should also have a positive bearing on project design and development. As it also entails additional costs, IFAD should make certain that best use of this new instrument is made, in particular regarding improved policy dialogue and partnership building. We believe that this can best be achieved through IFAD’s involvement in the poverty reduction strategy paper process in close dialogue with the stakeholders in the countries of operation.

Regarding the Fund’s investment activities, we take note of the encouraging fact that investment income as presented in the Financial Statements is – again – showing positive results. This is due to the impact of the new investment policy which was approved in December 2001 but also a result of a significant recovery of the capital markets. This upswing in the capital markets which makes equity investments attractive again should, however, not lead to a softening of the approved conservative investment policy which allows only for a very limited amount of equity investments. The Fund, as an institution owned by member states providing tax payers’ money, must put safety and risk aversion before the change to reap higher profits through risky investments.

Some comments on the Programme of Work for 2004. We support the maintenance of a annual financing level of approximately USD 450 million. This should enable the Fund to sustain its impact on rural poverty alleviation by carrying out a lending programme of at least 25 projects in 2004. Twenty five projects for over one hundred recipient countries is of curse not much. The Fund will have to apply convincing criteria for the targeting of its program and – as I said earlier – we expect that a country’s performance and governance will be accorded a decisive weight.

Regarding the proposed administrative budget for 2004, we can support the proposed figure as it again reflects the Fund’s efforts to contain administrative costs as it has done over the previous years.

With regard to the ongoing Independent External Evaluation, which is a result of the last replenishment negotiations, we are looking forward to receiving an objective picture of the Fund’s work, its impact on rural poverty alleviation and recommendations for improvements. This findings of this examination should facilitate the fine tuning of the institution towards better results, i.e. augmentation of the number of the rural poor that can be lifted out of poverty through improvement of their living conditions.

In the context of this year’s format of the Governing Council, the theme “Trade and Rural Development” will be discussed. The Governing Council is an excellent platform for such a discussion as in it many representatives from developing and industrialized countries are united. There is broad consensus that trade capacity building is very important for developing countries and for the rural poor to aid in their fight against poverty. We believe that all market partners – developing countries and industrialized nations alike – will have to make appropriate efforts to this end. The creation of export and import friendly frameworks in developing countries must be encouraged and supported by the development agencies.

IFAD’s role in this context will be to help empower the smallholders and the rural poor to develop market skills in order to become market partners with a voice and bargaining power. Only this will enable them to engage in a mutually beneficial way with larger scale entities in the marketing and processing chain.

In conclusion, I want to thank you, Mr President, for your excellent leadership and work done for the institution and wish you continued success.

My thanks also go to the excellent staff of the institution for its professional work and proven dedication.