The two major items on the agenda for the ministers gathering at the Development Committee in Washington this week met with mixed receptions. Item one: the measurement of countries’ progress towards the Millennium Development Goals (MDGs) saw modest steps forward, with some criticism of the World Bank’s proposed approach. Item two: the rebalancing of the governance of the World Bank and IMF, saw no progress whatsoever. Meanwhile a number of ministers urged the Bank to do more on trade issues.
Governance: endorsing the status quo
The inequitable governance of the World Bank and IMF has long been a complaint of civil society campaigners and independent analysts. As they have become more deeply involved in a wide range of developing country policy areas, their dominance by richer countries has been increasingly questioned. The international community has appeared to recognise this, for example in the Monterrey and Johannesburg UN summit declarations last year. The Bank/Fund Spring Meetings, however, did not yield any steps forward on this agenda. Even a limited concept of a fund to enhance the capacity of developing country governments to represent themselves was not approved, let alone measures to change the Board architecture. The Development Committee communiqué merely “encouraged potential donors to actively pursue the idea of creating a financing mechanism that could support independent research and advice in key policy areas” and “requested the Boards of the Bank and Fund to consider and elaborate upon options with a potential for broad support, taking account of shareholder and institutional implications”. Asking Bank and Fund staff to assess and report on new ways they could be governed is likely to yield very little, as has already been seen in recent months. A better proposal, supported by the South African and UK governments among others, to establish a consultative group which would include high-profile outsiders, was not approved at this meeting. Without significant campaigning and pressure it is very unlikely that there will be any more progress to report by the annual meetings of the Bank and Fund in September, although ministers did ask to be briefed again.
The World Bank had proposed ahead of the meetings that it would take the lead in producing reports assessing whether countries’ were likely to meet the MDGs. This would imply the Bank judging tricky policy areas such as trade, aid quality and public administration. The Bank wanted to get the go ahead to produce an annual report, with shorter six monthly updates, for each of the Bank/Fund annual and spring meetings. Ministers, however, appear to have recognised the dangers pointed out ahead of the meetings by the Bretton Woods Project and others, and suggested modifications to the Bank’s proposal. The communiqué of the Development Committee called on the Bank and Fund to work closely with other international agencies “using institutional mandates to guide the division of responsibilities for monitoring work”. They also “urged the Bank, working in a participatory manner, to continue to improve the Country Policy and Institutional Assessment (CPIA) methodology and the transparency of its application”. This refers to the World Bank’s annual scorecard of low-income country policies which it uses to allocate finance. This is controversial because it is non-transparent and because the judgements made to compare countries are subjective and not informed by wide debate. Trevor Manuel, the South African finance minister who chairs the Development Committee, noted that “Ministers urged that the assessments included in the global monitoring reports be based on transparent criteria that would facilitate objective and impartial judgments, with several calling for the active participation of developing countries in the further work to be done on refining the CPIA methodology and application”.
Several ministers, notably US Treasury Secretary John Snow, urged the Bank to go further with measuring the direct results of its own lending programmes. Snow said “The United States will continue to insist on measurable results in all aspects of MDB activities. Goals, baselines, benchmarks and post-completion evaluations must be embedded in the design and implemented throughout the life of country, sector, and institutional strategies as well as individual projects. Projects must contain clearly defined components with a sound results-based performance measurement plan that will enable mid-course adjustments to maximize success”.
The British government, represented in Washington by Gordon Brown and Clare Short, cautioned, however that “we are focusing on managing ‘for’ rather than ‘by’ results. Managing for results is forward looking, focusing on what needs to be achieved and using information on progress intelligently to assess what more can be done to achieve these results. Managing by results, on the other hand, is backward looking, rewarding past performance without necessarily analysing the factors underlying performance”. They complained that the Bank’s indicator framework for ‘results-based Country Assistance Strategies’ is “excessively complex, imposing excessive burdens on monitoring for both the World Bank and developing countries [and] risking diluting the key benefit of the results framework, which is to change World Bank incentives and reporting to strengthen the focus on results during implementation”.
Ministers urged the World Bank and IMF to do even more work on trade, recognising that the future of the international trade talks is uncertain at best. The Development Committee Communique urged “the Bank and the Fund to continue to step up their efforts to support trade. We urge that future Country Assistance Strategies include trade-enhancing lending operations and capacity building for member countries where such trade-related support is a clear country priority”. Trevor Manuel reported that “several Ministers encouraged the Bank to expand the treatment of trade in Country Assistance Strategies (CASs) and to follow-up more aggressively on the diagnostic studies carried out in the context of the Integrated Framework”. Clare Short and Gordon Brown, meanwhile, stated that: “the coverage of trade in Poverty Reduction Strategies needs to be expanded to ensure that country-owned PRSP and CAS lending programmes support the trade objectives of developing countries. Expanded coverage should also look at the likely poverty impacts of trade liberalisation, and the complementary policies that are required to maximise the benefits from trade reforms”.
- The British government complained that “at present, Poverty and Social Impact Analysis (PSIA) is not routinely carried out for major reforms in World Bank and IMF programmes, although the Bank intends to set out plans for PSIA it will support in its CAS, including PSIA of IMF-supported reforms. The World Bank and the IMF should work with country governments and other stakeholders to develop a matrix of planned reforms requiring PSIA, identify a lead agency (not necessarily themselves), establish a timeframe, and agree a process of dialogue with stakeholders on reform design”.
- The Sovereign Debt Reduction Mechanism proposal was killed off, following intense US industry and government opposition.
- Concern was expressed over the failure of donors to contribute more finance to the Education Fast Track Initiative, while ministers were also cautious that such vertical programmes might frustrate efforts to base aid on countries’ own priorities as set out in Poverty Reduction Strategy Papers.
- Several Ministers welcomed the Bank’s renewed attention to infrastructure, for example in water.