IFI governance


Highlights of Tom Scholar meeting with UK NGOs, Monday 26 June 2006

28 June 2006 | Minutes

NGOs attending

  • Jeff Oatham, One World Trust- – transparency in general, complaints and response mechanisms.
  • Tricia Rogers, Jubilee Debt Campaign
  • Tom Mayne, Global Witness
  • Peter Chowla and Lucy Baker, BWP
  • Jasmine Burnley, Action Aid
  • Steve Mandel, new economics foundation
  • Martin Powell, World Development Movement
  • Olivia MacDonald, Christian Aid
  • Hetty Kovach, Oxfam
  • Sarah Hague, SCF
  • Tricia Feeney, Rights and Accountability in Development
  • Zoe Wildig, CAFOD

DFID and Treasury attendance

  • Nirav Shah, international financial institutions department, DFID
  • Tim Bunhill, international financial institutions department, DFID
  • Roy Parris, international financial institutions department, DFID
  • Clare Harris, International financial institutions department, DFID
  • Alice Kehoe, Policy Advisor on climate change team, DFID
  • Miranda Schnitger, Global Policy and Institutions department, HMT
  • Simon Bor, Global Policy and Institutions Team, HMT.

1. On clean energy investment framework and climate change (BWP, Christian Aid):

Key NGO concerns:

  • Focus on clean coal and nuclear as ‘clean alternatives’
  • Market based approach to solving the problems of climate change
  • Lack of analysis of poor people’s needs
  • fails to hold the north responsible
  • focus on grid-based power plants
  • ignores the Bank’s funding for oil, gas and mining projects, a major contributor to carbon emissions

TS response:

  • polarised views on the WB board and was hard to get agreement, emerging market countries see it as a risk
  • draft framework still at an early stage, acceptance that climate change is both and environment and development issue is progress. Need to persuade shareholders that there is a problem
  • questioned the assertion that nuclear is mentioned in the paper
  • Detailed work programme to be laid out at Singapore
  • DFID has a lot of work in progress, they feel responsible given that they pushed this issue so hard at the G8. The Bonn Declaration in 2004 triggered the Bank to get more people to work on this issue

2. On corruption (CAFOD, BWP)

NGO concerns:

  • Process questions on “Strengthening Bank group work in governance and anti-corruption”- what is the timeline? Will written UK comments be made public? Will there be a public consultation on the paper?
  • Concerns that this is a big process, but is being pushed forward very quickly
  • This should be tied into a look at illegitimate debt and the Norwegian funded Bank paper examining these.

TS response:

  • The Bank already has a governance and anti-corruption strategy. TS wouldn’t expect the paper to produce anything radically different from what the Bank already has.
  • Development committee ministers have asked for a copy of the paper and that the Bank should consult widely.
  • Has not yet been discussed at board, expects a further paper to be circulated in July. Paper “should” be open for public consultation from July to August, but unable to promise anything. UK comments can not be made public.
  • TS will look into the subject of a Norwegian funded paper on illegitimate debt, he hadn’t heard of it before.

3. On aid effectiveness/ conditionality and fiscal space (JDC, Oxfam, WDM, ActionAid, Christian Aid)

NGO concerns:

  • The conditionality review process is not working – has not lead to significant change in practise nor is policy up to scratch. The recent Eurodad report has shown that conditionality is still very strong. It’s not on the development committee agenda for September and should be.
  • benchmarks- there has been an increase in privatisation conditions
  • concerned that this contradicts UK policy on conditionality, NGOs demand decisive action. There is also a feeling that whilst the UK won’t use its own aid to impose policy conditions, it does so through the IFIs
  • PRGFs are funded by the UK but they have increasing conditionality (for example Burundi).We would like an assurance that the UK will in fact (as it has promised) withdraw from IMF PRGF’s which impose policy conditions
  • UK government is using aid to impose conditions. Therefore the UK should withdraw funding, both bi-lateral and via the Bank. They should also lobby other governments to act similarly.
  • A threat to reduce funding will definitely catch attention, possibility to form coalitions with Norway

TS response:

  • UK government has made some progress as compared to other donors in reducing conditions, ownership and timing. Streamlining conditionality has been on the agenda for a long time
  • There are two upcoming vehicles for reaching a solution: IEO review of structural conditions in Fund programmes and Bank’s review of its own conditionality policy. IEO-lots of evidence, Bank review will have less. Once this evidence base is established, next steps will be clearer
  • But as of now there is not enough evidence that conditionality is increasing. He welcomed the Eurodad report on conditionality and said he would review it.
  • UK is out at one end of the spectrum- almost a “loan voice”. Developing countries are not very vocal. No one complained about the forced privatisation in Burundi except for him.
  • It’s up to Hilary Benn to decide what to do with the UK’s money
  • PRGF is self-sustaining and there is no further contribution for the UK to make
  • If UK reduced its IDA XV contribution then would have less influence, the UK is an integral part of the IMF/WB, its position as a ‘heavyweight member would diminish
  • Dev committee agenda is already crowded, can only have two items and can’t have everything. Benn will raise conditionality in his statement.

4. On debt sustainability framework: (nef)

NGO concerns:

  • ref to new report Debt relief as if people mattered: a rights-based approach to debt sustainability. Should not be taxing people below the poverty line.
  • Shouldn’t be restricted to HIPC or IDA only, the UK should be willing to shift the debate from debt repayment to debt sustainability considering poverty and social spending

Tom Scholar response:

  • HIPC and MDRI rules that apply to debt relief are different from the debt sustainability framework. HIPC is a compromise- the UK wanted to be more generous, and would have been happy to pay more
  • IMF current debt sustainability framework is not about determining relief, but to give countries a clear sense of what they can afford to borrow (red/orange/green light system).
  • Work is still not complete and getting donors to pay was demanding. It won’t be through debt relief, but greater aid that achievements are made. The UK has spent all of its political capital on the MDRI/G8 deal so don’t expect any future effort to push debt relief

5. On IMF strategic review: governance reform proposals and transparency (BWP)

NGO concerns:

  • The UK seems to be taking a defensive position on quota reform
  • To really support reform the UK should be advocating for comprehensive reform of leadership selection, transparency and voting rights.
  • The Fund’s efforts at outreach and transparency in the strategic review have been weak and ineffective.
  • Concern that future policy changes will not show improved transparency or participation
  • What will UK do to more forcefully demand increased transparency since it has been unsuccessful so far

TS response

  • The UK is not being defensive, but each country is taking its own interests to heart in the debate
  • The UK supports a broad set of wide-ranging reforms; but we have to concentrate efforts where there is likely to be consensus. We are concerned that developing countries may be hurt and are working to stop that, but we are working on the things that are nearest to agreement/consensus
  • It is out of the board’s hands in some ways for now because we are waiting for the MD’s proposal on quotas
  • On transparency of strategic review, the transparency process will be better in the future because policy changes will go through the normal participation procedures
  • Most of the SR work program consultation will come later because the Board, management and staff are busy with the governance question
  • The UK still support greater transparency and publishing of working papers, but the board has gone against this.

6. On IMF and complaints mechanism (OWT)

NGO concerns:

  • Currently there is no complaints mechanism for people to lodge complaints against the IMF
  • The IMF should be directly accountable

TS response:

  • Differences between Bank and Fund: Fund does not finance projects, and it is not obvious how to set up a mechanism. Ideas on how to do this?
  • “direct accountability doesn’t fit very well within the IMF’s structure”

7. On IMF and revenue transparency (Global Witness)

NGO concerns:

  • How will the IMF follow up on guide to resource revenue transparency?
  • Article IV consultation to be extended to private sector such as oil industry
  • IMF should get behind the EITI more and adopt a more common approach with the World Bank

TS response

  • Resource revenue transparency has been central for some time
  • Some programmes where resource revenue is fundamental, e.g Congo
  • Proper attention to resource management and broader conditionality agenda, the IMF is in the right place generally

8. On health and education (SCF/Action Aid):

NGO concerns:

  • User fees
  • Follow up from commitments of last meeting
  • No clarity on health financing
  • Concerns regarding the IEG evaluation of education
  • Secondary and tertiary v primary education

TS response:

  • Health user fees was discussed at CODE last week. Caroline Sargeant will be in touch
  • Countries complain that they are being pushed towards primary when would like to prioritise tertiary. But the Bank is trying to stick to the MDG agenda. How to balance global priorities v. country ownership
  • Need to increase funding for predictability, the fast track initiative for education funding will be a focus at the annual meetings to push this forward

9. On ESSD (BWP)

  • TS has also heard rumours about the dismantling of ESSD and has raised concerns about it with management. It is still being considered. It is the president’s responsibility but he feel it plays an essential role.