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Environment

Background

Meeting on the World Bank between UK NGOs and Douglas Alexander, Secretary of State for Internationa

16 September 2009

24 September 2009

Present

DFID: Rt Hon Douglas Alexander MP, Secretary of State for International Development; Stephen Doughty; Rachel Turner
UK NGOs: Jesse Griffiths (Bretton Woods Project); Louise Holly (Results UK); Sarah Edwards (JDC); Gideon Rabinowitz (UK Aid Network); Naomi McAuliffe, (Amnesty International UK); Max Lawson (Oxfam) Rachel Whitworth (Bretton Woods Project)

Minutes

1. The World Bank and health

NGOs made the following points:

  • Supported the government’s drive for free healthcare in the developing world. Would like to see the UK continue to champion free healthcare, and push the Bank to do the same – will need to convince Zoellick and win the intellectual argument. NGOs will continue to advocate this.
  • The incongruence between the DFID policy on health promoting free publically backed health care and the World Bank pushing private health insurance is a key issue.
  • A strong statement is needed from World Bank president, Robert Zoellick in support of free healthcare in developing countries. The danger is that they say they are in favour of the abolition of user fees, but in practice support private insurance, which means the poor have to continue paying for healthcare.
  • The Bank’s performance is patchy; good progress in, for example Nepal and Burundi contrasts with a problematic stance in, for example, Ghana and Sierra Leone. In Ghana the two lowest quintiles of the population don’t have access to healthcare. The private insurance system that the Bank supports is funded publically, through VAT.
  • The UK should be a champion for free healthcare and tax based financing. The SoS should try to get Zoellick’s views in Istanbul and try to persuade him of the evidence that this path to healthcare will achieve much better results for the whole population.
  • World Bank procurement rules are still a problem; rather than supporting country systems, they favour adopting their rules, which are controversial.

The SoS made the following points:

  • Interested in what NGOs thought the UK’s lobbying strategy should be. Is it, in NGO opinion, that the Bank’s 2007 health strategy is wrong or a cultural issue in the Bank?
  • The White Paper states HMG’s stance in favour of the abolition of user fees: we will continue to support this.
  • The UK is one member of the board and a number of other major stakeholders at the Bank have supported the emphasis on private health insurance not least the Americans. As a result the UK’s ability to change policy on this issue is limited. However health is an obvious area where the Bank has room for improvement.
  • Zoellick acknowledged on health that there needs to be progress on using country systems. The White Paper includes this issue, including on procurement; it will continue to be a focus for DFID.
  • However there is a lot of work ongoing at the Bank in following up the necessary changes on its overall health portfolio, so inevitably prioritisation will occur. Need to examine the IEG report in detail – are the problems mainly disbursement or is it the way that money is spent?
  • DFID has argued that participating in the task force can help to drive change at the Bank.

2. Education – the Bank and the Fast Track Initiative (FTI)

NGOs made the following points:

  • Evidence shows that as FTI funding goes up, funding from IDA for education is going down, and are concerned that there may be a displacement effect. The Fast Track Initiative was created to increase access to finance for education, but the overall level of finance for education is stagnating.
  • This also appears to be the assumption of Bank officials in the education department we have spoken to: they can reduce IDA funding because of FTI.
  • The Fast Track Initiative trust fund, managed by the Bank, has to follow IDA regulations and Bank conditionality. This has slowed down disbursements and caused other problems, such as the FTI not being able to fund non-government sources. The Netherlands has withheld funding from the FTI for these reasons. This is a particular problem in conflict affected countries. We would support the FTI being managed independently, outside the Bank.

The Secretary of State and officials made the following points:

  • Would be interested in examining the evidence for these claims; would obviously be concerned were this the case. However overall, both FTI and IDA are on an upward trend at present. It may depend on the time period you look at. IDA money is committed over 3 year timeframes but actual disbursement can be lumpy so a decline in one particular year is not necessarily indicative of an overall decline.
  • Agree that there have been problems over disbursement. The rules do allow the FTI to disburse to non-Bank channels, though this hasn’t always been used by the Bank.
  • Agree that it shouldn’t be de facto World Bank who manages disbursement at country level.
  • Are aware that US considering next steps on education. Of all the global funds the FTI is the one most focussed on country level systems.
  • Obama has expressed a political interest which may have an impact.
  • Action – Results will complete their analysis of the evidence and present to the World Bank team at DFID.

3. Other Issues

Governance reform

NGOs made the following points:

  • With the aim to effect governance changes by the Spring 2010 meetings, we need to see something that looks significant. Istanbul is a stepping stone to a more comprehensive package in Spring.
  • On chair reallocation Europe should reduce the number of seats it holds on the board and there should be an end to permanent seats, a signal from the UK that it would be willing to support this would be helpful.
  • Making the Bank more effective by giving developing countries, particularly the poorest, a greater say would be politically popular. Our supporters would back such a move; shouldn’t assume that the public would react negatively to the UK giving up its permanent seat – the opposite is likely to be the case.
  • Developing countries already provide the majority of funding to the Bank through repayments on IBRD and IFC loans.

The SoS made the following points:

  • We don’t see it as a simple binary issue where European vote must go down and developing country votes must go up. We are looking at a package of reforms including the appropriate balance between the shareholders and the board – it’s not sensible to pull one element of the negotiations out. There is also merit in incentivising donors to contribute to IDA.
  • We need to build a political constituency for multilateral reform. As the largest donor to IDA the UK public may not want to see the representation at the Board diminish. It will be difficult for European Ministers to explain to their domestic constituencies why they increased resources at the same time as giving up influence at the Bank.
  • The Zedillo commission may report before Istanbul, but the timeframe for governance reforms is Spring 2010. However, the content of the report will inform the IDA 15 mid-term review and IDA 16 replenishment.
  • Need to appreciate what a major thing this is, we haven’t had a new formula for the bank since the original Bretton Woods Conference. DFID does support the formula reflecting borrower engagement with the Bank.

Conditionality

NGOs made the following points

  • From an overview of the programmes funded by the World Bank in 2008, one third of projects involve one or more conditions relating to liberalisation or privatisation.
  • There needs to be an independent review of World Bank conditionality before IDA replenishment. The Norwegian study was a good example of how an independent study can help show the reality between Bank and NGO claims.
  • We welcome the UK government’s recent revision of the conditionality policy and the fact that this has set a higher standard for country ownership of conditions. We would suggest that given the standard set by the UK government whereby conditions relating to privatisation and liberalisation will no longer be allowed, will the UK government encourage the Bank to adopt a similar position?

SoS made the following point

  • The question is whether the World Bank conditions are country led – would welcome evidence if they are not.
  • As long as we know that WB’s Good Practice Principles are broadly in line with our approach we won’t be pushing for a change in Bank policy.
  • The IMF has accelerated further than the Bank in terms of removal of conditions.

AOB

Crisis lending and Debt moratorium

NGOs made the following points

  • We need more access to finance for developing countries which are struggling to cope with the impact of the financial crisis. That finance needs to be grants not loans because could be facing a renewed debt crisis, given the impact of the economic downturn, which would be exacerbated if they have to access more credit to cope with the crisis.
  • UNCTAD and developing countries have supported the idea of a debt moratorium – this would free up immediate financing for developing countries right now at a time when countries are struggling with their debt service obligations.

SoS made the following points

  • The IMF predicts overall debt indicators will continue to improve this year, and it is important that the IMF continues to monitor debt positions very carefully.
  • The UK’s policy position was focused on ensuring the Debt Sustainability Framework could be made more flexible rather than on a moratorium.

IFC Performance Standards review

NGOs made the following points:

  • The IFC policies do not currently match up to international human rights standards.
  • Action: Amnesty to follow up on this with DFID on this.