In October UK Executive Director Stephen Pickford was called before the Treasury and International Development Select Committees for questioning by MPs. He said he was optimistic that the IMF could change and that the new Poverty Reduction and Growth Facility (PRGF) demonstrates its ability to do so. Asked to give examples of Fund successes he pointed to its involvement in resolving the crises in South Korea and Brazil which stabilised the global economy. This demonstrates the IMF‘s important role in tackling structural economic problems.
He outlined UK priorities for the IMF as implementation of the HIPC debt Initiative and Poverty Reduction Strategy Papers; IMF transparency; private sector involvement; implementation of the codes on monetary and fiscal policy and the social principles; WB–IMF cooperation and collaboration; and IMF housekeeping.
The Treasury Committee was concerned that there was no systematic accountability to parliament of the UK Executive Director, and no transparency in Board voting. Pickford admitted that the IMF was not as transparent as it could be but said disclosure of the UK‘s voting position was a matter for the Chancellor of the Exchequer. A committee member remarked that “you [the IMF] are asking everyone else to be transparent but not yourself.”
The committee was also concerned about double standards in applying conditionality between countries, for example between Russia and Pakistan, and whether the IMF could monitor how its resources were used. Pickford replied that in practice there was an intensive dialogue between staff and country but ultimately the staff set conditions. However, EDs did talk to staff when they were designing programmes and they did have informal input. He admitted that the IMF cannot easily monitor how its loans are used.
Pickford told the Treasury Committee that country-driven programmes were necessary to avoid the suggestion that an agenda is being imposed on countries.
Asked how the IMF would deal with poverty-focussed programmes that differed from typical programmes Pickford pointed out that funding from the IMF‘s new Poverty Reduction and Growth Facility will be conditioned on appropriate macro-economic and good governance policies.
In response to International Development Committee concerns, Pickford remarked that the prescription might not be wrong, and better ownership might help improve outcomes. When questioned further on how PRGF would differ from ESAF, Pickford agreed that there was no guarantee that behaviour would change but staff wanted to make the new structures work. Flexibility was already entering into programmes, allowing some countries to increase their budget deficits, but:
“the Bank and Fund will have to demonstrate more flexibility under the new [poverty reduction] umbrella if government priorities are to drive programmes … [however] … since PRSPs will be developed with advice from the Bank and Fund no paper will come to the Board which it will have difficulty with.”
In January 2000 the Development Committee will publish a report of this hearing and the July 1999 hearing with Alternate ED Myles Wickstead. The Treasury Committee will also publish the minutes of their hearings with Stephen Pickford and the Chancellor. See www.parliament.uk.
The UK Treasury’s first annual report to parliament on UK activities in the IMF is now on: www.hm-treasury.gov.uk
