##g funds. more broadly, short - term public budget relief ( through fast - disbursing development policy operations ) must be strictly and verifiably targeted to restoring fiscal space for essential social needs ( health, education, nutrition ) ; a sharp focus on long - term development goals, above all the need to support food security, social safety nets and infrastructure, especially in african countries, must be maintained. we support the envisaged surge in the deployment of ibrd and ifc resources. lending growth over time under persistent uncertainty on economic and financial conditions warrants continued budgetary discipline and a thorough review of both institutions ’ financial sustainability and overall risk exposure. the front - loading of ida resources and fast implementation procedures such as the vulnerability financing facility, are appropriate measures at this time of crisis. we believe that ida is well positioned to accelerate its support to low income countries, thanks to the substantial increase of its commitment authority for the next three years under the ida 15 replenishment. 3. crisis and climate change : two intertwined challenges the complexity of dealing with climate change reflects the intricacy of development challenges in an increasingly interdependent world. climate change encompasses, and amplifies, concerns related to natural resource scarcity, food supply and security. it entails substantial financial requirements and distributional tradeoffs that, in turn, pose daunting political economy challenges. however, neither these challenges nor emergencies related to crisis management should undermine the wbg ’ s commitment to the climate change agenda. scientists have documented that the window of opportunity to tackle climate change is shrinking fast and that urgent and unprecedented levels of multilateral collaboration are needed. moreover, the un climate change conference in copenhagen in december will shape a new global financial regime providing the world bank with a unique opportunity to liaise with lead negotiators emphasizing the wbg role in the international debate on climate change. in particular, we expect the wbg to help develop currently existing or proposed financial schemes to support less carbon intensive technologies and to adapt rural and urban environments to the adverse impacts of climate change. 4. voice we welcome the progress made in implementing the first stage of the reform aimed at enhancing the representation of dtc in the world bank group. as agreed at the last annual meetings, the shareholding review should consider the evolving weight of all members in the world economy and other bank - specific criteria consistent with the development mandate of the institution. we invite management, in close interaction with the board, to

inflation rate to prevail for the economy in general. perhaps more importantly, few businesses appear to believe they have'pricing power ', and individual price changes against a low inflation backdrop are much more transparent than was the case under high inflation. witness, for example, the degree of scrutiny of price rises in the period after the introduction of the gst, or the attention routinely given to changes in petrol prices. much of this is due, of course, to the more competitive nature of markets and the activities of the competition authorities, but the low inflation environment is also an important factor. perhaps the group who devotes most effort to anticipating inflation trends is professional investors in the bond market. nominal bond rates are usually thought to embody an allowance for future inflation. the difference between the indexed bond yield – a real yield – and the conventional bond yield is a measure of the average rate of inflation anticipated over the life of the bond plus, probably, a premium for the variability of inflation. initially, markets were sceptical that we would keep inflation to the targeted rate. but after monetary policy passed the first test in the inflation - targeting period – tightening in 1994 ahead of a pick - up in inflation in 1995, which was successfully capped and reversed – this measure of inflation expectations came down to levels which were consistent with the inflation target. there have been ups and downs in this gauge of expectations, which broadly corresponded to the cycle in actual inflation. but on the whole, from 1996 through to 2003, these expectations have been fairly closely matched to the 2 to 3 per cent target. in general, i think we can say that while high inflation expectations have not been eradicated from every corner of the economy, generally speaking inflation expectations are low, consistent with the inflation target, and quite stable. that is no small benefit because it allows policy more flexibility than would otherwise be the case in assisting output in the face of shocks. has this performance on inflation been associated with any cost to growth? while we cannot know the counterfactual, i think everyone now acknowledges that australia's growth performance in the past decade has been exceptionally good. table 2 updates a table from an earlier evaluation of performance made by staff at the international monetary fund ( imf ) in 1998, which compared australia with other inflation - targeting countries and a group of non - inflation - targeting countries. r. brooks ( 1998 ),'inflation and monetary policy reform ', in australia : benefiting from economic reform, international monetary