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Development goals to cost $40-60 b a year: World Bank

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NEW DELHI, Feb. 22

FINANCING the smooth achievement of a key set of development goals that entails halving of extreme poverty and for substantial improvements in health and education in developing countries by 2015 could cost in the range of $40-60 billion a year in additional aid for the next decade-and-a-half, the World Bank has said.

The achievement of a key set of development objectives known as the United Nation Millennium Development Goals (MDGs) is also contingent on developing countries themselves reforming their health, education and institutional policies to improve the effectiveness of development aid.

"These numbers show that without additional resources we will not meet the development goals. But they also underscore why success lies in a partnership of action between developing and rich countries," said Mr James D. Wolfensohn, President of the World Bank. He has called on the rich countries to double its overseas aid from the current level of $57 billion a year and dramatically prune their agricultural subsidies.

"While money is not the only input, or even the most important input, it is crucial for reaching the goals," said Ms Shanta Devarajan, co-author of the new costing assessment and Chief Economist of the bank's human development network. She said the bank's preliminary estimate of the cost of reaching the MDGs is in the range of $40-60 billion and roughly consistent with the assessments of other global agencies such as the World Health Organisation and UNESCO. The estimate in the recent Zedillo report of the UN of $50 billion in additional financing and echoed subsequently by the UK Chancellor of the Exchequer, Mr Gordon Brown, also falls in this range.

The challenge is to meet this goal in each country, as there are 65 countries, which are likely to meet the goal without further external assistance/policy changes. The bank estimates that, of these 65 countries, 43 could effectively absorb more aid today and would require an additional $39 billion per year to reach the poverty goal by 2015. For the remaining 22 countries, with weak policies, the bank assumes that if these countries were able to bring their policies and institutions up to the average of the better-performing countries, then an additional $15 billion per year would be required to assist them in reaching the poverty goal.

The assessment also assumes that the world trading system would remain by far unchanged, becoming neither more protectionist nor more open. If the Doha meeting of the WTO spawns tangible results, these would include greater market access for the developing countries which would be "much larger than financial transfers through official development assistance over the period to 2015".

However, the bank hastened to note that these gains would not substitute for development assistance in helping all countries reach the MDGs. The geographic distribution of trade-related benefits favours the high-trading, middle-income countries. A preliminary model-based simulation of reducing protection by half worldwide yields a welfare gain in 2015 of about $200 billion for developing countries as a whole. But only a small proportion of these gains would accrue to the sub-Saharan Africa and South Asia outside India.

The World Bank estimates that the additional cost of achieving universal primary education by 2015 at some $10 billion to $15 billion a year, depending on whether regional, national or global averages are used. These figures are also close to those furnished by UNICEF in their "minimum global estimate" of $9.1 billion. For the health goals, the bank calculates that the sum required is in the range of $20 to $25 billion per year. The cost of achieving the environment goals (water and sanitation) have been calculated by looking at a range of estimates, one for achieving universal coverage ($30 billion a year); another for reaching basic levels of coverage ($9 billion).

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