World Bank-IMF spring meetings 2005 report

G7 finance ministers’ meeting: “looking forward to further discussion”

No breakthroughs were made on the key issue of multilateral debt cancellation, with finance ministers saying only that they had “made progress in preparation for the Gleneagles G7 summit” in July. On the possibility of IMF gold sales to fund the write-off of debts owed to the Fund, only that the ministers “look forward to discussing this with the full membership”. Similarly, on so-called ‘innovative sources of finance’ such as currency transaction taxes and the international financing facility, no progress.

IMFC: “bold actions are urgently needed” – none to be found

The UK proposal to use IMF gold sales to fund debt relief appears to have been killed off by US Treasury Secretary John Snow. Swiss finance minister Hans-Rudolf Merz also came out vocally against the sale of gold. On the issue of how to finance the cancellation of debts owed to the World Bank, Snow said “it’s clear that others are coming round to Washington’s view” (of using the institutions own resources to cancel debts rather than seeking new resources from rich countries). Stephen Rand of Jubilee Debt Campaign was in disbelief: “the urgency of the crisis should prompt decisive action. The clock is still ticking. Children are still dying.”

On trade, the IMFC wants “ambitious results” from the Doha round “notably in agriculture” and “liberalisation in financial and other services”. It encourages the IMF to “work with other partners in the Integrated Framework to explore further ways of easing adjustment to trade liberalization, including through the Trade Integration Mechanism”.

On the strategic review of the IMF’s role, there are calls for further work on improving surveillance, and financial sector assessment is to be more integrated into surveillance efforts including capital account liberalisation. This directly contradicts calls from southern country ministers that “the extension of the Fund’s mandate to include capital account transactions is not necessary”, and revives the spectre of a Fund mandate to push capital account liberalisation on developing countries, which many blame for the onset of the Asian financial crisis in 1997.

On improving the ‘democratic deficit’ at the IMF, there was no progress. There are hopes that the next quota review at the annual meetings will provide an opportunity for the membership to make progress on quotas, voice, and participation. That’s been heard before. “The current system of governance is completely out of line with economic realities,” said Ariel Buira, director of the G24 secretariat of developing country finance minister. “What is happening is that many countries are now moving away from these institutions.” Reinforcing Buira’s point were comments from Japanese finance minister Sadakazu Tanigaki who said a review of Asia’s IMF quotas was necessary.

On IMF work in low-income countries, calls for an improvement in the alignment of the Fund’s lending vehicle with national development strategies, the development of a monitoring arrangement for non-borrowing countries and calls for increased support to help countries weather macroeconomic shocks. No mention in the communiqué of the call from the Algerian executive director that the programme monitoring arrangement “should not result in increased conditionality that would limit ownership and constrain successful program implementation.”

Development Committee

The tone of the development committee meeting was set by the failure to move the agenda forward at the IMFC. Talking points included:

• No agreement on further debt relief or new sources of development finance;
• In response to the Commission for Africa findings, a call for the Bank to develop an “action plan for Africa”;
• To make aid more effective, emphasis was placed on better alignment of assistance with country strategies and “streamlining” conditionality. The UK had encouraged the Bank to “support programmes which are agreed rather than imposed, and to agree to measure progress against benchmarks which focus on the impact of a country’s overall policy programme rather than particular policy decisions.”
• No progress on democratising the inequitable structures of the BWIs. After three consecutive years where this item has appeared on the agenda with little more than cosmetic change to show for it, South African finance minister and development committee chair Trevor Manuel said his deadline was now the spring meetings 2006. In his statement to the committee, UK development minister Hilary Benn said that “reducing the nature and burden of conditionality is also a way of increasing developing country voice.”
• During the committee press conference, outgoing president Wolfensohn described the widely-criticised leadership selection process as being taken by “conclaves”. Trevor Manuel described Wolfowitz as a “wonderful individual, perfectly capable” but added that “the process hasn’t helped. It’s not his fault.”

Civil society-BWI dialogues

• IMF in low income countries
• Civil society meeting with the World Bank Group on the extractive industries review update
• IFC consultation with civil society on the safeguard review
• Workshop on parliamentary scrutiny