In mid February high-level meetings were held in Washington DC to examine proposals to reform the governance of the World Bank and IMF (see Bretton Woods Update 32). The next major discussions will be at the Bank/Fund Spring Meetings in Washington on 12-13 April. Some limited capacity-building measures for Southern Executive Directors may be announced, but there has been no progress on more significant reforms. Providing more funding and personnel to Southern country representatives at the Bank and Fund is welcome but certainly not sufficient to address the democratic deficit.
A serious effort to improve Southern country voice at the institutions would require going far beyond capacity-building to change the composition, voting shares and transparency of the Bank/Fund Boards. Unless this is done many civil society groups will complain that this is just a typical donor exercise of throwing money at a problem rather than tackling the underlying issues. Civil society groups are circulating a joint sign-on statement which sets out seven demands for rebalancing board composition and voting power, making governing bodies transparent, opening leadership selection, and reversing the extension of World Bank/IMF mandates into areas covered by other UN agencies. Such points are also being raised by civil society groups preparing for the meeting of the UN Economic and Social Council on 14 April where the World Bank, IMF and WTO have to report.
Governments have expressed some interest in adding one or two extra Executive Directors to the Bank/Fund boards, but minimal appetite for improving Southern countries’ voting shares or renegotiating the functioning of the constituency system. The US and a number of European governments have indicated that they are not ready to consider change in these areas. Issues of transparency and leadership selection are also being given minimal official attention.
The Bank/Fund staff discussion paper produced in February claimed “the principle underlying the distribution of quotas, shares and voting rights – that these should in large measure reflect the relative importance of member countries in the global economy – remains appropriate”. Most possible reforms to enhance the ability of developing countries to form and put across their views are described in pessimistic language implying that no progress is likely. Increased developing country representation on the Development Committee and International Monetary and Finance Committee was, however, suggested. These ministerial committees convene at Bank/Fund Spring and Annual Meetings to determine strategy.
The paper also envisaged establishing a trust fund to support Southern countries’ ability to analyse issues coming to the Board. This capacity could be established in Washington or in the countries or regions being represented. Large multi-country constituencies might be offered more advisers/assistants, an additional Alternate Executive Director, or additional access to outside technical and research support.
Without significant outside pressure combined with leadership by some key Northern and Southern governments, this window of opportunity to reshape the governance of the Bank and Fund for the 21st century will close with minimal results. Discussions may, however, continue until the Annual Meetings in September, giving more time to build pressure for real change.
Voice and Participation of Developing Countries in Decision-Making at the World Bank and IMF. A Technical Note by Bank/Fund Staff for the Development Committee (5 February 2003). Available on request from the Bretton Woods Project.
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