"The World and Japan" Database (Project Leader: TANAKA Akihiko)
Database of Japanese Politics and International Relations
National Graduate Institute for Policy Studies (GRIPS); Institute for Advanced Studies on Asia (IASA), The University of Tokyo

[Title] Debt Relief and Beyond (Report transmitted by G7 Finance Ministers to the Heads of State and Government), Genoa Summit

[Place] Genoa, Italy
[Date] July 21, 2001
[Source] http://www.esteri.it/g8/index.htm
[Full text]

Debt Relief

Implementation of the enhanced HIPC Initiative

1. The enhanced HIPC Initiative we launched in 1999 is providing deeper, broader, and faster debt relief for the HIPC countries. The Poverty Reduction Strategy Papers(PRSPs), developed by the HIPC country itself, through a participatory process involving civil society and with the support of the International Financial Institutions and donors, ensure that debt relief is directed towards economic and social policy reform and poverty reduction.

2. At Okinawa 9 countries had reached the decision point, with USD 15 billion debt relief. Now 23 countries (Benin, Bolivia, Burkina Faso, Cameroon, Chad, The Gambia, Guinea, Guinea Bissau, Guyana, Honduras, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Sao Tom? and Principe, Senegal, Tanzania, Uganda and Zambia) have reached their decision points. Data provided by the International Monetary Fund and the World Bank indicate that the debt relief committed to these countries under the HIPC initiative amounts to USD 34 billion in nominal terms. On top of this, many creditor countries are canceling Official Development Assistance (ODA) debt, and a number of creditor countries are also reducing commercial debt beyond the level required under the HIPC framework. Overall debt relief for these countries, including from traditional mechanisms, amounts to over USD 53 billion, on the basis of an initial debt stock of USD 74 billion. As a consequence, the debt service ratios of the above-mentioned countries will be significantly lower than previously, and indeed significantly lower than the average for other countries at similar levels of income. Current estimates project social expenditures to increase in these countries by USD 1,7 billion in 2001-2002. Based on available indications, the 23 countries are, on average, budgeting about 40 percent of their HIPC interim assistance on education and 25 percent on health care. Other priority sectors include the fight against HIV/AIDS, rural development and water supply, governance and institutional development, and road construction.

3. The success of the HIPC Initiative ultimately depends not only on the timing and amount of debt relief, but also on country efforts to put in place sound policies to use resources effectively, strengthen productivity and growth, and invest in the social sectors, thereby reducing poverty. While we welcome the results that have been achieved so far, we also encourage countries to continue their efforts to reach the completion point. As set out at the Decision Point, this will require further progress on economic, structural and social reforms, and improved governance, including a significant strengthening of countries' ability to track expenditures resulting from HIPC debt relief. Improving the effectiveness of public expenditure management systems is a major objective to ensure that budgetary savings from debt relief, as well as domestic resources and external assistance, are used effectively for poverty reduction purposes.

4. It is important to provide interim debt relief expeditiously to countries that have already reached the decision point, in order to assist them in their poverty reduction efforts. We encourage the international community at large, including the IFIs,to assist the HIPCs in developing and implementing sound and participatory poverty reduction strategies. We further encourage the IFIs and donors to help countries strengthen budgetary planning and public expenditure management systems, and to better coordinate their delivery of aid. Social impact assessments of policies, within the PRSP framework, are also vital. In this respect, we are encouraged that the World Bank, with the IMF and developing countries, is developing improved methods to provide better analysis of the impact of policies on the poor.

Pre decision point cases, including conflict affected countries

5. We encourage HIPCs that have not yet reached their decision point to undertake expeditiously the necessary economic and social reforms needed to benefit from debt reduction, including the development of a strategy for overall poverty reduction in co-operation with the World Bank and the IMF.

6. Countries in this group face severe difficulties related to conflict, poor institutional and structural environment, weak governance or mixed records of past economic and social policy performance, which slow the pace at which they can proceed toward this goal. We confirm our intention, as these countries undertake the necessary reforms, to strengthen our efforts in helping them take measures needed to come forward for debt relief.

7. At Okinawa G-8 Leaders called upon countries in conflict to end these conflicts and to embark quickly on the HIPC process. We confirmed that if this happened we stood ready to strengthen our efforts to help them prepare and come forward for debt relief. Since then there has been a series of high level contacts to reiterate this message. We welcome the IMF efforts announced at the Spring Meeting to put its emergency post conflicts assistance on concessional terms. We also welcome the steps being taken by the World Bank to provide prompt assistance to post-conflict countries. We note that the existing HIPC framework has the flexibility to accommodate the special circumstances of post-conflict countries, including with regard to the length of the track record, if significant progress has been made towards macroeconomic stability, governance, capacity building and monitoring. We stress the importance of maintaining a strong focus on performance with respect to reforms and commitment to poverty reduction.

8. The IMF and World Bank should take into account, in their assessment of the HIPCs ability to move forward in the process, all factors that could hamper the ability of these countries to focus on economic growth and poverty reduction. A crucial aspect will be the transparency, level and accountability of military spending to ensure that the debt relief is used to reduce poverty and is not diverted towards unproductive expenditure. In this area coordination with the UN, NGOs and bilateral donors is critical.

Debt sustainability

9. The enhanced HIPC Initiative is designed to enhance the prospects for the medium and long-term debt sustainability of HIPCs. Recognizing the vulnerabilities of these countries, the Initiative raises the amount of debt relief at the decision point to a significantly higher level than under the original framework. We do not regard this framework as an appropriate and effective instrument to deal with temporary adverse shocks. Other financial mechanisms, including IMF and World Bank facilities,will generally be more appropriate to respond flexibly to the needs of members that arise from temporary adverse external shocks. In exceptional circumstances, when exogenous factors cause fundamental changes in a country's circumstances, we reaffirm that within the HIPC framework the option exists at completion point to consider additional debt relief.

10. Furthermore, we welcome the discussion now underway in the IMF/World Bank on debt sustainability in the medium/long run in HIPC countries. In particular, we urge increased focus on efforts to maintain long-term debt sustainability after HIPC debt reduction. Of primary importance are the economic policies of the HIPCs themselves,including the development of strong debt management systems. We note the ongoing discussions on the increased use of grants within the IDA-13 framework, and encourage the World Bank to carefully explore the related financial implications and practical implementation issues and report for the third IDA replenishment meeting to be held in October. An appropriate mix of concessional loans and grants seems necessary for new assistance to HIPC countries to keep the indebtedness at a sustainable level. To this end, we reaffirm that assistance should be guided inter alia by performance-based allocation of resources and by the need to increase the overall effectiveness of assistance to developing countries. We thus call for coordinated efforts among the actors concerned - the donor and creditor countries, the HIPCs themselves, and the IFIs - to better define appropriate financing policies and to ensure their implementation.

11. At Okinawa G-8 Leaders highlighted the importance of responsible lending by donors. We note the work of the OECD on strengthening measures to ensure that export credit support to HIPCs and other low-income countries is not used for unproductive purposes and welcome the agreement to a Statement of Principles in relation to HIPCs. We call on the OECD to consider further measures to enhance transparency in this field, including a published review of national rules and regulations.

Strengthening of the Initiative

12. We note that over the last 12 months several non-traditional Paris Club creditor countries have taken measures to provide debt relief under the enhanced HIPC Initiative. While this is encouraging, we underline the necessity of the active and full participation of all creditors in providing timely and appropriate debt relief to HIPCs.To further improve the effectiveness of the Initiative, on a bilateral level, we have all agreed as a minimum to provide 100% debt reduction of ODA and eligible commercial claims for qualifying HIPC countries. We call on other bilateral creditors to make similar efforts to extend the amount of debt relief available to eligible HIPC countries.

Financing issues

13. We recognize that the enhanced HIPC Initiative entails significant costs, including for debt owed to the IFIs. Considerable progress has been made in the past year to mobilize sufficient internal IFI and donor resources to promote deeper, broader, and faster debt relief under the enhanced HIPC initiative. Specifically, we acknowledge:

-The full implementation by the IMF of steps needed to finance its share of the enhanced HIPC initiative;

-The special efforts by multilateral development banks and their members to

identify internal resources to finance their debt relief effort;

-The substantial contributions to the HIPC Trust Fund. We welcome the USD 2.5 billion in pledges to the HIPC Trust Fund from various donors, including USD 1.8 billion from G-7 countries, directly or through the European Community: and

-The need to continue to monitor the situation carefully in the future as far as financing needs are concerned.

Beyond debt relief

Broadening the strategy for growth and development

14. Last year in Okinawa G-8 Leaders agreed on the need to go beyond the debt initiative and move towards a comprehensive, multidimensional approach to poverty reduction and economic and social development. A broader growth and development strategy is required to strengthen developing countries' ability to benefit in full from the opportunities of a fast integrating world economy and to achieve the International Development Goals (IDGs), including a reduction by one half of the proportion of people living in extreme poverty by 2015. We note the contribution made by the Third UN Conference on Least Developed Countries (LDCs) held in Brussels from 14 to 20 May 2001.

15. The foundation for a more effective fight against poverty lies first and foremost in countries' own efforts to engage in quality reforms to achieve strong growth, good governance and enhanced social development, including the participation and empowerment of the poor. The international community must assist these countries in developing and implementing transparent, country-owned and participatory Poverty Reduction Strategies, integrating policies that foster improved productivity and sustained growth as a necessary condition for poverty reduction with actions focused on improving the distribution of economic gains through greater and more equitable social investment and social policies.

16. We have identified in accordance with agreements in other multilateral fora key priority areas to which efforts aimed at promoting effective poverty reduction and sustainable economic growth must be directed. To this end, strategies have been outlined which envisage the participation of all development partners, including multilateral organizations, bilateral donors and the developing countries themselves,and the constructive interaction of the private sector and civil society, spanning three broadly interrelated areas: trade, private investment, and aid.


17. There is a clear link between increased trade and investment and stronger economic growth. Expanded trade enhances growth and welfare and, embedded in comprehensive national development strategies that take into account the needs of the poor, contributes to poverty reduction. Trade liberalization must be pursued so that the benefits of trade can be extended to the largest number of countries and people.

18. The share of LDCs in world trade has declined in the last decade according to available estimates. There are several reasons for this, including in particular the high tariffs LDCs face in agriculture and low technology manufactures in which many of them specialize, quantitative restrictions, trade distorting subsidies, and lack of domestic capacity. All parties must work constructively and cooperatively towards a successful launch at the Fourth WTO Ministerial Conference in Doha, Qatar this November of a new ambitious Round of multilateral trade negotiations which would promote trade's full benefits for poverty reduction worldwide and encourage global growth, by spurring broader and deeper liberalization for the goods and services produced, sold and consumed by the poor in countries everywhere, and by reinforcing the multilateral trade system. The negotiations should seek to address the needs of developing countries and especially LDCs in terms of improved market access, capacity building, and implementation issues.

19. LDCs will not be able to benefit fully from expanded trade unless urgent action is taken to further open markets to their exports. More recently, important steps have been taken, independently of progress in launching the new round of trade negotiations, by several developed countries to improve market access for LDCs exports, including: the African Growth and Opportunity Act in the US; the Everything But Arms initiative by the EU; the Canadian program extending tariff- and quota-free access to several hundred additional tariff lines for LDCs; the expanded application of Japan's Generalized system of Preferences. All industrial countries should work towards the objective of extending duty-free and quota-free access for products originating in the LDCs. Accompanied by economic reform and trade-related capacity building in LDCs, this would contribute to a significant expansion in LDCs' exports, to increased levels of investment flows towards LDCs, and to a permanent rise in their welfare. According to recent estimates by the World Bank, for some of these countries the impact in terms of GDP growth could even exceed the amount of annual aid flows. It is important that the more successful emerging economies with significant world trade take similar action.

20. Access of products of the poorest countries is also hindered by quantitative trade restrictions, by heavy recourse to distorting subsidies, and by the difficulty of these countries to meet standards in export markets. To increase the effectiveness of trade liberalization for LDCs, complementary action also needs to be taken to remove non-tariff barriers that distort trade and to ensure appropriate use of contingent protection. Future negotiations within the WTO need to ensure the full involvement of developing countries as well as provide them information and technical assistance to facilitate their participation in rulemaking and compliance with the agreed rules and procedures. To this end, the accession of LDCs to the WTO should be encouraged and facilitated.

21. To fully benefit from enhanced market access, LDCs need to implement policies that would facilitate the supply response and lead to a sustained expansion of exports, including liberalizing their own trade. The international community must assist LDCs in implementing such policies and in building up the capacity to sustain export expansion and diversification. We call on the IFIs, the WTO and the other multilateral organizations participating in the Integrated Framework Initiative to intensify trade-related technical assistance to LDCs to help them overcome internal constraints to trade integration, develop appropriate institutions and infrastructure,effectively participate in trade negotiations, and mainstream trade reform into national development strategies such as PRSPs and country assistance strategies. We strongly support the recent renewal of the Framework aimed at strengthening the coordination of multilateral organizations, bilateral donors and developing countries' efforts in the trade field and look forward to the completion of the pilot scheme. The IMF, the World Bank Group and other Multilateral Development Banks (MDBs) should concentrate on supporting trade-related capacity building in LDCs. Their assistance can facilitate a strong supply response by these countries to expanded trade opportunities, by promoting needed economic policy reforms including to deal with potential tariff revenue loss, investment in infrastructure to facilitate market access, judicial and administrative reforms, and investment in human capital. We call upon the WB and the IMF to reflect on the ways and means to facilitate LDCs' trade liberalization and greater integration in the world economy, including consideration of the use of existing facilities, as appropriate, to cushion LDCs from the possible adverse short-run effects of trade liberalization.

Private investment

22. Capital accumulation as well as technology diffusion is crucial to long-term improvements in living standards. The upsurge in FDI flows into developing countries in the past decade has largely bypassed the majority of low-income countries, where these flows remain low and under-sized with respect to their economic potential. In order to promote faster progress towards achieving the IDGs, it is essential that the conditions be created in developing countries, and particularly LDCs, for attracting more investment, including larger and more sustained FDI flows. These countries must be encouraged and supported in their efforts to create a favourable climate for private investment and capital accumulation, both domestic and foreign. In addition to sound and balanced macroeconomic conditions, it is necessary for less developed countries to increase certainty, consistency and effectiveness of the enabling environment by promoting market-based policies, such as transparent legal,regulatory and institutional frameworks, open trade and open and non-distorting investment policies. The international community must enhance its support for reform in LDCs to help them lay the foundations and strengthening the ground for private sector development.

23. The G-7 countries will continue to take an active role, through multilateral processes such as the International Conference on Financing for Development in 2002, and with bilateral efforts, to support developing countries and in particular LDCs in making their national regulatory and policy frameworks more attractive to private investment. The IFIs should help these countries to set in place the policy framework necessary for attracting and harnessing the developmental advantages of longer-term capital flows, in particular by supporting measures to reduce legal uncertainty. We support the strengthening of the World Bank's Foreign Investment Advisory Service (FIAS) providing advice and training to the poorest countries on policies for developing an attractive investment climate. We call on the Bank's IFC and MIGA to focus an increasing share of their resources to supporting programs for private sector development in the poorest countries. MDBs are encouraged to make enhanced recourse to innovative operational instruments (such as co-financing and guarantees) to promote private-public sector commercial partnerships aimed at strengthening infrastructure and human capital, and to facilitate the access to financing for small and medium size enterprises.

24. The implementation of investment related best practices as well as the development of international principles, codes and standards can provide guidance for and underpin domestic reform efforts by developing countries. We call on the IFIs and other relevant multilateral bodies to intensify their effort to promote implementation of international codes and standards in the context of the policy dialogue with partner countries. We call on the World Bank, in cooperation with other relevant bodies, to step up its work to produce ROSC assessment modules of compliance with corporate governance and accounting standards. Progress in the implementation of standards must be visible in order to allow for the private sector actors to adjust their risk assessment and risk ratings. At the multilateral level, a stable and non-discriminatory investment regime could be brought about and maintained through the establishment of a high-standards framework of investment rules. We also encourage the continued discussion on investment in the WTO working group and urge the relevant international institutions, in particular the World Bank, the OECD, WTO and UNCTAD, to continue their cooperative efforts focusing on best practices with respect to the protection of property rights, investor protection, investment policies, competition-enhancing policies and transparent tax regimes.

25. Regional cooperation can enhance the attractiveness of LDCs for trade and investment by increasing the size of their markets, by promoting convergence towards best practices, by improving policy credibility and by helping to secure peaceful and stable relations. Multilateral institutions and particularly MDBs are urged to step up their support for initiatives of regional cooperation aimed at opening trade and improving services and promoting beneficial investment policies. These institutions are also urged to provide technical assistance for effective pooling of resources and expertise and for the upgrading of standards.

26. Effective transfer and dissemination of technology to developing countries is a key element for accelerating the pace of their economic development. We call on the WTO and the World Intellectual Property Organisation (WIPO), in collaboration with the World Bank, to provide further assistance to the poorest countries in complying with international rules on intellectual property rights. Industrial countries should promote consultations within the WTO aimed at reviewing the scope and impact of flexibilities under the current agreements on trade-related aspects of intellectual property rights (TRIPS), taking into account the objectives of poverty reduction in developing countries. In addition, ways could be explored to facilitate implementation in the poor countries.

Investment in key social sectors

27. Effective investment in human capital is a key component of long-term economic growth and increased productivity. A healthy, able and well-educated population is an objective in itself as well as the conduit to accelerated social and economic development. The challenge faced by the poorest countries in upgrading their human capital through education and skills development and improvement of health conditions often exceeds national capacities and requires enhanced support from the international community. We need to enhance and make more effective core social investment in the poorest countries, building upon and coordinating bilateral and multilateral aid with countries' own efforts through the PRSP process, with effective measurement and monitoring of results and tracking of expenditures. In their program design, IFIs should help LDCs' governments to protect their expenditures in key social sectors. In this respect, we support ongoing work aimed at providing a substantial IDA replenishment later this year.


28. While health conditions have improved over time in most developing countries, the gap between these countries and the lower income countries in a number of health indicators is increasing. At the current rate, the IDGs related to improvements in health outcomes will not be achieved. The rampage of the HIV/AIDS pandemic, as well as the spreading of malaria, tuberculosis (TB) and other infectious diseases, which represent the main burden for health care in the poorest countries and kill around 15 million people a year, many of them children, are threatening to reverse decades of development.

29. Last year in Okinawa, G-8 Leaders defined health as a key priority for development and recognized the need for global concerted action to scale up national efforts for more efficient and accessible healthcare and to help build capacity nationally and locally in the delivery of appropriate interventions. They also committed to work in partnership to meet three critical targets established by the UN and its partner agencies in reducing the burden from the three major communicable diseases and help to counter the social and economic consequences in the poor countries. These targets envisage the achievement by 2010 of:

- a 25 percent reduction in HIV/AIDS among people aged 25 and below;

- a 50 percent reduction in prevalence and death from TB;

- a 50 percent reduction in the burden of disease associated with malaria.

30. In response to this challenge, our partnership should focus on raising awareness and strengthening prevention, improving health systems, and enhancing accessibility to new and existing health products to tackle HIV/AIDS, TB and malaria. This should build on and develop further existing initiatives, bring together multilateral and bilateral development partners, developing countries and the private sector, and make use of an innovative approach to funding. In this context, we set out a number of key policy measures, as follows.

31. This global partnership should emphasize an integrated approach to combating HIV/AIDS and other infectious diseases, focusing on "best practices" in four areas.

- First the primary emphasis should continue to be on prevention of diseases through increased public education, further training of medical and other personnel, enhanced accessibility to products that can aid prevention, and reduced transmission of infection from mother to child. Prevention is the most cost-effective and most proven way to address the challenge of these diseases.

- Second, resources must be available for care for those most affected by these diseases, especially the growing number of children affected by AIDS.

- Third, measures reflecting a joint commitment of governments, industry and civil society should accompany interventions by the global partnership to facilitate local access to key medicines and supplies. In consultation with the private sector and the competent multilateral organizations, developed and developing countries should examine ways to encourage licensing agreements between the pharmaceutical industry and developing countries to promote the development of local productive capacity without undermining the protection of intellectual property rights and in conjunction with safeguards against parallel importation into developed countries' markets. We welcome the very significant price cuts that have been achieved in certain countries through a fruitful discussion between national authorities and pharmaceutical companies, with the support of international organizations and other governments. This illustrates the opportunity of voluntary arrangements for discounted pricing for poor countries, which can allow these countries to be charged the lowest possible prices, accompanied where necessary by appropriate measures to prevent the re-export of medicines acquired by the LDCs at low prices.

- Finally, the global community - both public and private sector - is encouraged to establish well-designed programs for developing new vaccines and drugs that can aid in both prevention and treatment of infectious diseases. Industrial countries should ensure that adequate incentives are in place to promote the development of new vaccines, drugs and diagnostics, and to make these products available at lower cost to the poor countries. These could include tax measures, where appropriate and consistent with prevailing tax policy guidelines as well as competition and trade rules.

32. As an element of this partnership, we support the establishment of a dedicated global health fund to catalyse public and private resources to fight these major infectious diseases and thereby facilitate progress towards attaining the IDGs. The G-7 countries should lead the process by committing to the initial start up of the fund.The resources made available by the fund, along with strong action on the part of the developing countries themselves, should produce significant advancements towards achieving the three UN targets set out above. This dedicated fund should aim at providing additional resources to support the fight against infectious diseases.

33. Efforts to fight these diseases will not be effective unless action is taken to strengthen health care delivery and infrastructure and to foster sustainable health system development. Public commitment at a national level is a pre-requisite for success and should be reflected in national development strategies, such as the PRSP,prepared in participation with civil society and other partners. The World Bank and other MDBs should assist developing countries in strengthening public sector management in the area of evidence-based health policies and in the delivery of sustainable pro-poor services. They should focus their programs on strengthening health systems, including sector diagnostics and preventive health care in co-operation with other health-related international institutions. These focus areas,combined with the establishment of result-based indicators and improved data collection system, are critical to enhanced quality, transparency and accountability of spending. We recommend that developing countries work with these institutions to seek increased participation by the private sector in water, waste and health infrastructure management where appropriate.


34. Education is a human right and the obligation of all governments. This right is enshrined in agreements ranging from the Universal Declaration of Human Rights to the Convention on the Rights of the Child. Good quality education enhances economic performance, contributes to higher growth and poverty reduction, and promotes social stability and cohesion. The elimination of gender disparity in primary and secondary education fosters development since well-educated mothers provide better health care to their children and better education for girls leads to wider economic opportunities and reduced fertility rates. A skilled workforce enables countries to benefit from the transfer and adaptation of technology which is a key engine of development.

35. Basic education is weakest in LDCs, both in terms of enrolment and literacy rates.More than 113 million children do not have access to primary education, while 880 million adults are illiterate. In many lower income countries gender discrimination permeates education systems; youth and adults are denied access to the skills and knowledge necessary for gainful employment and full participation in their societies.The problem of malnutrition is also a great impediment to education in LDCs because poorly fed children under-perform and are less likely to stay in school. Without accelerated progress towards more equitable, affordable and inclusive education,poverty elimination will not be achieved and inequalities across countries and within societies will widen further. Unless education is made a key development priority in country development strategies and public expenditures, and donors' support is strengthened, many countries will not meet the IDGs of:

- universal primary education by 2015;

- elimination of gender disparity in primary and secondary school by 2005.

36. Last year in Okinawa G-8 Leaders committed themselves to support the poorest countries' efforts to enhance investment in education, building upon the Framework for Action developed by the Dakar World Education Forum, the follow-up of which is ongoing under the leadership of UNESCO. The key responsibility to develop education sector strategies which accord priority to the achievement of the IDGs and to promotion of quality education for all lies with national governments, in consultation with civil society and local stakeholders. Well-defined plans include enhanced budgetary allocations for the expansion and reform of systems, innovative partnership with the private sector, NGOs and local stakeholders, strengthened support from bilateral agencies, enhanced lending, more effective cooperation from multilateral organizations, and the development of indicators that measure results. National and international non-governmental bodies will need to support these initiatives locally.

37. It is essential that the education needs of working children are addressed, by eliminating extreme and abusive forms of child labour, and by enabling children to combine work and education where the labour is not abusive and income replacement is not an immediate option. We also need to focus our action on addressing obstacles to girls' school enrolment and their retention in school. In this context, the G-8 countries should lend their support to the global Girls Education Initiative, led by UNICEF on behalf of the UN system, to ensure that gender equality is central to all national programmes and consistent with the Dakar Framework for Action.

38. Additional resources should be provided to countries with demonstrated commitment to good governance where funding is a major obstacle to achieving universal primary education and gender equality by the target years. MDBs and multilateral development agencies like UNESCO, UNDP, UNICEF, UNFPA, in collaboration with other donors, should focus on supporting poor countries' plans for achieving the IDGs for education. This support should include building the capacity of regional, national and local institutions, well-co-ordinated financing for basic education set within sector strategies, investment in basic infrastructures. Teacher training should also be supported to improve the quality and availability of education opportunities and effective steps to counter the impact of HIV/AIDS on basic education should be supported. The World Bank and other MDBs should scale up their lending and technical assistance programs in favour of better public sector management and policy design to increase the quality and accountability of service delivery. Progress can also be achieved through support for community-based initiatives. The scope for mobilizing international private sector funds deserves attention.

39. The potential of distance learning for widening educational opportunities and for developing more effective ways of training teachers should be fully exploited. To this end, beside the assistance provided by multilateral organizations, an important contribution can be given through the activities of the G-8 Digital Opportunities Task Force established in Okinawa. Expanded use of the Internet could benefit teacher training and distance learning by linking institutions worldwide to enable the sharing of materials and best practices.

40. While primary education should be the priority for most developing countries, poor countries should also be assisted in their efforts to develop post-school and out-of-school education. The transition to employment should be facilitated by strengthening the demand for skills development opportunities and the links between formal education and the labour market. Developing countries should also be assisted in improving the quality of tertiary education in priority areas through schemes of international cooperation among universities, which enable the sharing of knowledge,programs, technology, and expertise.