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IFI governance

Background

IMF consultation on the 2011 review of conditionality

13 May 2011

Date: 4 May 2011
Location: London, UK

Participants

IMF staff: Amina Lahreche, Richard Harmsen

Civil society participants: Bandula Kothalawala (Trades Union Congress), Julian Boys (Christian Aid), Tim Jones (Jubilee Debt Campaign), Peter Chowla (Bretton Woods Project), Henrike Allendorf (Bretton Woods Project)

IMF presentation on the review of conditionality 2011

The IMF is currently reviewing conditionality in all its programmes. The last such review had been conducted in 2004-2005. The concept note on this endeavour was published in March and the analytical work has started, but the public consultation process was opened only afterwards. Submissions are welcome until 31 May and can be made to the Fund’s website (http://www.imf.org/external/np/exr/consult/2011/SPR/index.htm). The IMF, moreover, informed that consultation meetings have been held in Europe last week with NGOs, banks and the European Commission. The review is supposed to be concluded in October 2011.

The Fund reported that methodologically the review would have quantitative and qualitative analysis and include stakeholder interaction. It would assess whether conditionality was consistent with programme objectives as well as being in line with the five principles of ownership, parsimony, tailoring, coordination, and clarity from the 2002 Guidelines. Out of a total of 70 countries with IMF programmes a sample of 25% will be selected for deeper qualitative analysis, representing different regions and programmes. The time focus will be on the last 3 to 4 years, but going back to 2003 for countries with longer IMF engagement. The cut off means only agreements concluded before mid-February 2011 will be included.

Discussion on process and methodology of the review

Civil society groups expressed concerns about a lack of engagement of civil society groups in the developing countries. While appreciating the IMF’s effort to consult civil society groups in London, they suggested that it would be more important to reach out to those affected by IMF conditionality.

IMF representatives replied that the online consultation would offer space for everybody to engage in the review process and the Spring Meetings in Washington served as a forum for face-to-face engagement with people from all over the world. With 96 programmes in 70 countries to be assessed engagement with everybody would be too resource intensive.

Civil society groups suggested to create a sub-sample of the 25% considered for more in-depth qualitative analysis and visit only those countries.

Civil society groups also expressed concerns over online consultations, because in of quality or even lack of internet access in many developing countries and the short period of consultation. Comments and counter-analysis of the IMF’s finding would require to at least knowing which countries the IMF is looking at in depth.

IMF representatives responded that 18 countries will be selected for in-depth analysis and that the list of those countries will be published.

Civil society groups asked whether the conditionality review would use the same questions for country authorities that have been specified by the IEO report on structural conditionality to create a basis for comparability.

IMF representatives responded that they will look at results of the IEO report, but the questions for country authorities – which have already been sent out – would vary from the IEO questions. They said that comparability would not be important, because the results could speak for themselves.

Civil society groups said that comparability would matter, because on its own 10% would seem like a low number, but if reference would have been 5%, it would be high.

Discussion on substance of the review

Labour standards

Civil society groups expressed concern that not much effort has been seen to include core labour standards into IMF programme designs or coordination with the ILO at country level.

IMF representatives responded that it was not the IMF’s mandate to enforce these labour standards, but said that IMF programmes request country ownership under which broad government consultations were encouraged.

Social impact

Civil society groups also expressed concern about the social impact analysis in the conditionality review which according to the concept note will only assess how programmes have taken account of social impact, but will not assess the impact programmes actually had on social outcomes.

IMF representatives responded that the review would look at health and education spending, but that there would not be data available for income distribution or unemployment. They also said that the IMF was not equipped to look at social outcomes.

Civil society groups remarked that World Bank had a comprehensive database on estimates of wealth distribution and said that it would be crucial to undertake Poverty and Social Impact analysis before making policy. They also noted that in European programme countries, plenty of data is available – for example health outcomes or pensioner income levels in Romania.

IMF representatives accepted that they could delve deeper into those kind of issues in some of the qualitative case studies.

Lending instruments

Civil society groups ask whether the review would look at effects of the Flexible Credit Line (FCL) versus the Precautionary Credit Line (PCL)

IMF representatives responded that the review would look at the FCL and a comprehensive review of both instruments would be conducted next year. They noted that no PCL had been agreed before the cut off.

Conditionality guidelines

Civil society groups asked if different conditionality goals, especially ownership and coordination have conflicted, e.g. in European countries where coordination with the EU seems to not allow for much national ownership. How are these differences resolved, who won, who lost out?

IMF representatives confirmed that this was a concern in Europe and would be looked at in the review.

Conditionality design

Civil society groups expressed concern about the balance between revenue generation and spending cuts. Hey noted that the choice to not have conditionality related to tax evasion and capital flight is important as what what conditionality was applied.

IMF representatives responded that they would ask the Fiscal Affairs Department to help them on this topic during the review.

Impact of review

Civil society groups asked how the results of the review would be used?

IMF representatives responded that this would depend on the results. The process will be to publish the results, then make policy recommendations and assess whether conditionality guidelines, programme design or implementation needed changing.