IFI governance


Legislators courted but oversight insufficient

3 February 2004

The Parliamentary Network on the World Bank (PNoWB) will hold its annual conference February 15-16 in Paris. While there are an increasing number of international meetings of parliamentarians on international financial institutions, oversight by legislators of relations between their governments and the IFIs is still insufficient in both North and in the South.

Established in 2000, the PNoWB was initially a World Bank promoted initiative (see Update 27,33). Recently it was transformed into an independent entity under French law, with members from nearly 70 countries under the authority of a Board of 9 MPs. As well as its annual conference the Network organises field visits for MPs to see for themselves (accompanied by Bank staff) the impact of Bank projects.

Cross-border exchanges between parliamentarians are one of the ways to make oversight of government activities in multilateral institutions more effective. Many existing networks of parliamentarians could facilitate such exchanges; one of the merits of the PNoWB is that it brings together parliamentarians who have an interest in development issues. The fact that speakers from various backgrounds and opinions will be present at the upcoming conference sends a signal of openness. Panels will include NGO and business representatives, and there are plans for a side-session with civil society organisations.

However the PNoWB has to tread a fine line to keep everyone on board and avoid becoming a public relations instrument for the Bank. Beyond its official objectives, it is still unclear whether the Network is primarily a forum allowing MPs to challenge the Bank, or allowing the Bank to promote itself to MPs. The World Bank’s Paris office still plays a strong role in the organisation of the annual conference, and discussion topics on the agenda such as ‘The role of parliamentarians in strengthening the investment climate’ are framed in a way which may appear biased.

Perhaps unsurprisingly, the IMF is keen to use the Network as part of its efforts to increase its outreach to Parliamentarians. This was identified as a priority in an official review of external communications last year, and in a recent report by an ad-hoc working group of Executive Directors. IMF Deputy Director Agustin Carstens will participate in the Paris conference, alongside Bank President James Wolfensohn.

A central question with regard to relations between the Bretton Woods Institutions and parliamentarians is whether the priority for parliamentarians should be a ‘partnership-based approach’ for poverty reduction based on dialogue with the Bank and the Fund, or a scrutinising role of relations between the Bank and national governments? In his address to the Global Progressive Forum (see article in this Update), Finnish MP (and PNoWB Board member) Kimmo Kiljunen argued that “the parliamentary bodies of international organisations are of secondary importance from the perspective of representative democracy. The main emphasis must be on how to organize proper and comprehensive national scrutiny of governments at home”.

In most countries where parliaments exist, the government is primarily accountable to parliamentarians. For OECD countries, this means that parliamentarians are responsible for ensuring that aid money channelled through institutions such as the IMF and the World Bank is used efficiently for its intended purpose. Evidence that parliamentarians are performing this function is limited for many countries. The US chambers are exceptions to the rule. They have been instrumental in securing some changes in the way the IMF and the Bank operate. This is due to multiple factors: partly the influence of the US government within these institutions and partly as a result of pressure from a variety of actors, from progressive NGOs pushing for higher environmental and social standards to right-wing forces pushing isolationism when countries face financial crises.

In Europe however, parliamentary scrutiny of IMF and World Bank-related issues is modest. A recent study by French NGO Agir Ici concludes that “most parliaments in Europe are not adequately informed and consulted on IFI-related issues, and are not able to exercise even minimal, non-binding control”. Potential mechanisms for more effective scrutiny are described, such as annual hearings of Executives Directors, sending delegations of MPs to international events, or legislation binding the actions of a country’s representative at the Board on specific issues. The study focuses especially on France, Italy, Ireland and the UK. The British government will release its annual report on the UK and the IMF in the coming weeks.

The Halifax Initiative Coalition in Canada is preparing a similar survey on oversight of IFI activities by legislators, which will look at some of the obstacles to increased accountability such as the disclosure policies of the IFIs and of the borrowing countries themselves (send info to info@halifaxinitiative.org).

Impediments to parliamentary oversight are more directly relevant for borrowing countries. As a Brazilian ‘parliamentary front’ created in 2003 (see Update 34) put it, “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”. But this is made difficult by the nature of the agreements between countries and IFIs, and the way they are negotiated. While the ‘letters of intent’ negotiated between a country and the Fund are usually made public once the agreement has been signed, they are not debated openly beforehand, which means parliamentarians have little influence on them. In several instances (for example in Argentina and Brazil, see Update 33 and 37) the Fund has been accused of pushing a government to violate national legislation. Some of the IMF conditions -especially the most politically sensitive ones- are still only spelt out in confidential side-letters, which does little for the involvement of parliamentarians.

MPs across the world have one thing in common: they have very little time and many things to do. Civil society groups have, in some cases, compensated for the failure of parliamentarians to scrutinise IMF and World Bank operations. They can play a useful, complementary role to that of elected representatives by providing MPs with first-hand information and detailed insights.