European Parliament weighs in on future direction of IMF

News|Bretton Woods Project|16 March 2006|url
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On 14 March, the IMF came in for some heavyweight political criticism as the European Parliament adopted a resolution on the strategic review of the Fund. The resolution was the result of intense debate over a report drawn up by the Economic and Monetary Affairs Committee (EMA), which had received input from civil society organisations including the Bretton Woods Project. IMF staff in Brussels were reported to be actively lobbying for a weakening of the language of the report in advance of the vote.

Key points in the adopted resolution include:

• On governance, the resolution calls on member states "to work towards a single voting constituency - possibly starting as a euro constituency, with a view, in the longer term, to securing consistent European representation, involving the Ecofin Council Presidency and the Commission, subject to the European Parliament's scrutiny";
• On transparency and accountability, there is a call for "strengthened parliamentary control by the member countries of the IMF", and a request for the "publication of more extensive minutes from the IMF Executive Board";
• On macroeconomic conditionality, the Fund is censured for applying conditions which "have in some cases been too rigid and not always consistent with local circumstances".
• On trade, developing countries "should be able to establish protection for certain industries for a limited period so as to permit a steady development" and conditionalities must not "pressure low income countries into unilateral opening of markets outside the framework of WTO negotiations or impede their capacities to negotiate, in the framework of WTO negotiations";
• On debt, the Parliament "regrets that the [new debt sustainability framework] does not come close to addressing the problem of long-term, real sustainability in terms of creating conditions for low income countries to attain the MDGs".

NGOs monitoring the IMF will be disappointed that some of the more progressive recommendations in the report did not survive the vote in a parliament which is dominated by conservatives and liberals. However, Benoit Hamon, French MEP of the Socialist group, rapporteur to the EMA and chief architect of the report, believes that "despite the various points on which we lost in the plenary vote, the report is still a positive contribution".

Martin Koehler, advisor to the European Green Party, believed the report had lost "many important things". He highlighted the deletion of paragraphs, such as that calling for an increase in the weight of basic votes and the establishment of a trust fund to finance member shares of the poorest IMF members; and the alteration of paragraphs in a way which goes against their original intention, such as one which appears to endorse the extension of IMF structural policy into social and environmental fields.

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Published: 16 March 2006 , last edited: 23 March 2006

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