“Parliamentary Front” on IFIs

26 May 2003

Relations between Brazil and the International Financial Institutions (IFIs) will soon come under greater scrutiny. 25 MPs (mostly from the Worker’s Party, PT) have called on their colleagues to form a “parliamentary front” on IFIs and the national banking system. “The legislative power in Brazil cannot afford any longer not to question and debate technical aspects and political implications of the operations of the IFIs”, they said in a platform launched mid-May.

General objectives include defending national sovereignty in the design and implementation of economic and development policies; strengthening Parliament and civil society in decision-making processes on IFI programmes and projects; fostering debate and encouraging greater control of IFI operations; contributing to the coordination of national parliaments in Latin America to democratise existing institutions and recommending improvements to the international financial architecture.

MPs intend to do this through information-sharing and capacity building as well as direct intervention. Immediate steps proposed include:

  • Formulating new legislation on selection and accountability of Brazilian representatives at the Executive Boards of the IFIs,
  • Enacting local legislation to ensure information on projects is made public in a timely manner, and
  • Creating mechanisms to facilitate the participation of officials and civil society in the design of IFIs’ country strategies.

This would result in public hearings on the selection of Brazilian representatives and on IFI strategies for the country, and the introduction of new legislation and constitutional changes to ensure externally-funded projects do not jeopardize human rights. “This is a very important step. Brazil is in a decisive period and it is crucial that Brazilian politicians begin to reform local legislation and maybe even the constitution in order to set limits and new directions and guidelines for the relationship between our government and the IFIs”, said Flavia Barrios of NGO network hub Rede Brasil, which played an important role in promoting the initiative.

These efforts to gear up scrutiny and encourage debate on IFI operations, including via more coordination with other parliaments in the region, come at a time when many Latin American countries are involved in difficult and sometimes painful negotiations with international lenders. Nestor Kirchner, winner of the presidential elections in Argentina, will face difficult choices when the long-delayed interim IMF agreement comes up for re-negotiation in August. The fact that previous finance minister Lavagna will be part of his team suggests that no major change is to be expected. Similarly newly re-elected Paraguayan president Nicanor Duarte Frutos will have to overcome a profound rift with the Washington-based institutions, caused by a refusal to privatise public utilities.

But the external debt levels of many countries in the region have left little room for manoeuvre for elected representatives. MPs from across Latin America have issued a declaration asking for a fair and transparent arbitration process to address debt issues. It says “given the largely futile character of existing debt restructuring efforts, we believe it is necessary to establish fairer and more transparent procedures, in order to put a definitive end to the over-indebtedness and the ongoing impoverishment of the affected economies”.

A number of creditor governments are also increasingly being held accountable by parliaments on IFI issues (see Update 27, 33). The Italian Senate recently conditioned participation in the replenishment of the IMF’s Poverty Reduction and Growth Facility to promotion by the government of: more transparency and participation in the negotiations of these loans, better social and environmental impact assessment, and elaboration of an independent and transparent debt arbitration process.

The UK government recently released its annual report to Parliament on the UK and the IMF. It clarifies a number of positions the UK intends to defend, including increased transparency, independent surveillance, poverty and social impact assessment of key reforms, net reduction in IMF conditionality and specific proposals on governance (including an increase in basic votes). The Treasury Committee of UK MPs will travel to the US in early June where they will meet the heads of the Bank and Fund, and US NGOs.