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IFI governance

News

UK reports on its activities at the World Bank and IMF

12 September 2005

The UK’s Department for International Development (DFID) quietly published its first annual report of the UK’s involvement with the World Bank in March, in response to requests made by the Bretton Woods Project at hearings of the International Development Select Committee. The lack of depth of analysis of DFID’s report suggests that the government saw this as a box-ticking exercise rather than a serious commitment to improved accountability. DFID calls for:

  • Greater predictability of financing and matching to national budget cycles;
  • An increase in the proportion of support delivered through programmatic loans;
  • Greater management accountability for “performance against results; and
  • More progress on disclosure, including the publication of board documents and executive directors’ statements to the board and analytical work.

The report does not mention major Bank policy developments during the period or discuss the UK position on key investment projects. There is only a very limited discussion of whether DFID achieved its institutional objectives for the Bank, and none of whether UK objectives for spring and annual meetings were achieved. There is no summary of DFID’s progress in improving transparency and accountability to UK citizens in its dealings with the Bank, nor anything on follow-up to questions raised by the international development committee at their annual hearings on the World Bank and IMF. Absent are any references to the work of the Bank’s watchdog groups, the Operations Evaluation Department and the Inspection Panel.

Treasury to IMF: More flexibility

Treasury published its annual report on UK activities at the IMF in late July. The UK has been banging the drum for improved independent surveillance efforts for several years. This year’s report notes some limited progress but the Treasury is “concerned that a truly fresh perspective” is still missing. Accordingly, there are calls for a clear methodology for assessing the effectiveness of surveillance to be in place by the next biennial surveillance review in 2006, including an “assessment of the accuracy of assessments made by the IMF”.

The Treasury admonished the IMF to be “flexible enough to accommodate the extra investment needed in infrastructure, education and tackling disease”. However, there is no guidance on what to do if the IMF is found to be inflexible. The report restates the new UK government position on conditionality, questioning the use of conditions in “sensitive policy areas such as privatisation and trade liberalisation”. The report’s authors say that the UK will work within planned evaluations of conditionality “and in individual country discussions to promote the new approach proposed by the UK”.

The Fund is encouraged to enhance its capacity to conduct poverty and social impact assessments. There are also calls for a Fund review of their lending vehicle to low-income countries, the Poverty Reduction and Growth Facility (PRGF), to include an “assessment of how effective PRGF programmes are in reducing poverty and supporting countries’ own poverty reduction strategies.”

Despite its failure to take leadership on democratising the selection process for current IMF head Rodrigo de Rato, the UK government claims it would “like to see more progress on the crucial structural issues that play a key role in giving countries an effective voice.” In a future quota increase, the UK would support a general increase with a relatively large selective element allocated by a new quota formula; ad hoc increases to address the clearest out-of-line cases; and an increase in the basic vote to correct the erosion of voting power of the smallest members.”

Treasury committee investigation

The UK’s treasury select committee announced in August that it would be initiating an investigation in October of the structure and performance of the World Bank, the IMF and the WTO. Reform of the IMF and the World Bank will also be on the agenda when finance ministers and central bank chiefs from the Group of 20 meet in China in October. Food for thought for both processes comes from a new book entitled Accountability of the IMF published by the International Development Resource Centre edited by ‘Carin and Wood’.