Annual Meetings 2009: Communiqués coverage
News||3 October 2009|
G24 communiqué (3 October)
The G24 is a grouping of some of the most important developing countries in the World Bank and IMF. The G24 Communiqué is the first off the block, coming in earlier than the G7. It addressed the global economy first and foremost, but the four-page statement was much more detailed than non-statement produed by the G7.
The ministers lamented the position of developiung countries in accessing external finance. They noted that "they are at a disadvantage ... given the terms of borrowing, crowding out by larger developed countries, and the repricing of risk by institutional investors." That necessitates public responses, including from the IFIs, where "more still needs to be done." For the IMF, they proposed that more resources be made available to it by "at least doubl[ing] the size of overall quotas." A larger capital base has long been a G24 request, as they feel this would enable more credible IMF rescue packages without the need for bilateral complements and also less conditionality.
On one of the hottest debates - the international monetary system - the G24 again asked for the IMF to be more "evenhanded" in surveillance - a reference to their feeling that the IMF is not forceful enough in pushing policy changes in rich countries. They also "called on the IMF to consider steps to enhance the use of the SDR in the international monetary system."
IMF and World Bank voting rights both get substantial sections of the statement. For the IMF the G24 asked for a 7 per cent shift in vote, as opposed to the 5 per cent agreed at the recent G20 meeting. However they also continue to take the problematic position that "the redistribution of quotas must not be at the expense of other developing countries", meaning that even countries that are 'overrepresented' developing countries such as Saudi Arabia and Venezuela want to keep their voting shares. They also asked for furtehr reform of the quota formula, a demand they made in the last rounds of negotiations in 2006-8 including at the conclusion of the last deal. On the World Bank side, they demanded a "more ambitious" reform, and asked for a 6 per cent in voting power from developed countries to developing and transition. The stress is on using a different formula for the Bank "given its development mandate" and that the Bank relies on developing countries as clients.
Despite being most emerging markets a large section of the communiqué was given over to a discussion of issues facing low-income countries. They want donors to provide the resources needed to for loans and subsidies to low-income countries, without any expected contributions from emerging markets. They also "asked the IMF to reverse the decision to charge for technical assistance." More importantly the G24 was "deeply concerned about the low volume of concessional assistance for LICs" and asked that donors stump up for an additional replenishment of IDA ahead of the usual schedule. The meetings seem set to accomplish the creation of a crisis response facility within IDA, but the G24 asked that the resources be trully additional.
G7 communiqué (3 October)
The group of the 7 largest economies in the world usually issue a communiqué on the friday before the IMFC meeting. This year the G7 communiqué contains almost now content what-so-ever. It is almost identical in wording to the communiqué issued at the spring meetings in April. It has no analysis of the global economic situation and no statement about the G7 opinion on key policy questions regarding the IMF or World Bank.
It goes to show two things: that there may be some summit fatigue and that the G7 really is no longer the venue where important decisions are made. After a G7 finance ministers meeting June, a G8 in leaders meeting in July, a G20 finance ministers' meeting in September and a G20 leaders meeting in September, there is little left for the G7 finance ministers to say. The communiqué is basically a pledge that the G7 will fulfill pledges already made.
IMFC communiqué (4 October)
The International Monetary and Finance Committee (IMFC) is the direction setting body of finance ministers and central bank governors for the IMF. The Egyptian finance minister Yousef Boutrous-Ghali heads the committee and this year has shifted the design of the meeting to now include a working dinner on 3 October and a working breakfast on 4 October. It also includes a session without observers. It is unknown how these changes will impact the outcome of the discussons.
The IMFC communiqué continues the trasition established in the spring of referencing and welcoming the conclusions of the G20. As in the spring, little new is agreed with this statement. The ministers that sit on the IMFC, who have a significantly overlapping representation with the G20 group of finance ministers, committed to "maintaining supportive fiscal, monetary, and financial sector policies ... and stand ready to act further as needed to revive credit, recover lost jobs, and reverse the setbacks in poverty reduction." The Fund is tasked, as previously agreed by the G8 and G20, to come up with credible "principles for orderly and cooperative exit strategies."
On the crucial issue of IMF governance, the IMFC repeated the identical wording from the G20 communiqué in Pittsburgh at end September. It promises "a shift in quota share to dynamic emerging market and developing countries of at least 5 per cent from over-represented countries to underrepresented countries using the current current quota formula as the basis to work from." This means that a G24 demand for a 7 per cent shift was ignored in the final agreement. It also fails to clarify the issue of how to treat rich countries that are currently underrepresented according to the quota formula. That includes tiny Luxembourg as well as Ireland, Spain, Japan, and the United Kingdom. The IMFC referenced the executive board report on the options for governance reform, but failed to make any mention specifically of the civil society efforts under the so-called "fouth pillar". This was supposed to be an equal input to the board's work and the previous reports of the IEO and an eminent persons committee chaired by Trevor Manuel. Alas that seems not to be the case. One nice advance was a commitment to "an open, merit-based and transparent process for the selection of IMF management at our next meeting." This goes beyond previous commitment which only covered the managing director and not the deputy managing directors. This will help break the strangehold Europeans have on the top seat, and that the US has on the number two seat.
The previous work of the Fund on creating new facilities, expanding access limits and attracting new resources are, as expected, welcomed. However a new report "to study and report on the future financing role of the Fund" is requested by the next meetings. Interestingly another report is also commissioned: "We also call on the Fund to study the policy options to promote long-term global stability and the proper functioning of the international monertary system." This leaves open a door for the demand of the G24, a report on how the SDR can be given a greater international role, and indeed might further the moves towards a new global reserve system. The Chinese have been the keenest proponents of such a new system, though their calls have been echohed by France, Brazil, India and others; not to mention the UN commission of experts chaired by Joseph Stiglitz. Depending on the process and content of the paper - it may be the first discussion of such things at the IMF. The institution has refused to make any comments on a new global reserve system so far, even though it is the only international monetary institution and was founded to oversee the international monetary system.
Finally, the Fund is to review is mandate. It has a year to looking into "the full range of macroeconomic and financial sector policies that bear on global stability." However asking an international institution to review its own mandate is a bit of a one-sided proposition, since it is unlikely the IMF would opt to reduce its own role, as any student of organisational design would recognise. After the failure of the G20 chair review of the IFI roles to be a very open, consultative, or participatory mechanism for looking at these questions, most NGOs will likely look at an internal IMF review with even more scepticism.
Development committee communiqué (5 October)
It is no surprise that development committee produced one of its shortest development communiqués of recent times; the key issues of capital increases and governance reform are still the source of fierce dispute, and will not be agreed until next year's spring meetings. There is nothing of interest in the communiqué that wasn't already agreed at the G20 in Pittsburgh.
The need for donors to meet their aid commitments and for countries to "avoid protectionist measures" are repeated again. A decision on capital increases to bolster the Bank's underlying asset base is pushed to spring next year; a recognition of the fact that this affects voting shares and cannot therefore be divorced from the discussion of voting reform.
The G20 commitment that there be an increase of "at least 3 per cent of voting power for developed and transition countries" is repeated, under the existing deadline of next year's spring meeting. The G24's push to achieve a shift of at least 6 per cent appears to have been rebuffed again, and the only promise for low income countries is that their existing voting power will be protected. In any case, the total percentage share for 'developing countries' will be a skewed figure, as the Bank uses the IMF's classification system, which includes countries like Israel and Saudi Arabia in the developing country category.
The fact that low income countries are desperately short of resources is obliquely recognised with a review promised, though worryingly this highlights the idea that these could be provided at market rates through the IBRD "enclave lending".
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Published: 3 October 2009 , last edited: 20 October 2009
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