European CSO meeting with European IMF EDs

Participants:

Daniela Setton, WEED (NGO chair)
Peter Chowla, Bretton Woods Project
Antonio Tricarico, CRBM
Peter Lanzet, EED
Nuria Molina, Eurodad
Sony Kapoor, Tax Justice Network/Christian Aid
Sebastian Fourmy, Agir ici/Oxfam France
Sven Elander, Forum Syd
Jorgen Magdahl, Norway

Klaus Stein, ED, Germany (official chair)
Stephan von Stenglin, Alternate ED, Germany
Andrezj Raczko, Alternate ED, Poland
Yuriy Yakusha, Alternate ED, Netherlands
(name unknown), Advisor, Poland
Peter Charleton, Alternate ED, Ireland
Ramon Guzman, Alternate ED, Spain
Bertrand Dumont, Alternate ED, France
(name unknown), Senior Advisor, Italy
Barbara Marchitto, Advisor, Italy
(name unknown), Advisor, Slovakia
Felix Haupt , Advisor, Germany
Andrea Rieck, Advisor, Germany
Carsten Brinkmann, Advisor, Germany
Torsten Wezel, Advisor, Germany

Item 1: IMF Governance

Peter Lanzet – problems with voice and vote reform at the IMF, the possibilities of using double majorities
Antonio Tricarico – governance is more than voice and vote – asked for thoughts on the New Rules high level panel, and the need to address transparency, accountability and leadership selection

Klaus Stein:

• The EU process defined the EU position only last month. The terms of reference for that was finalised
• Board discussions are ongoing, but also at the G11, G20, G7 levels
• Country positions are very clear, but there is a lot of distance between them

Bertrand Dumont:

• The EU is committed to increasing the votes for low-income countries
• “protection and possible increase” on LICs vote – the EU will pay close attention to this
• There will be at least a doubling of basic votes
• There is also the issue of capacity of ED offices
• France is interested in the IMF staying involved in LICs

Ramon Guzman:

• On LICs – we are looking to “significantly cinrease” their votes, and to preserve them thereafter
• For IMF legitimacy the problem is not in LICs, it is in MICs
• LICs are not relevant to global financial stability

Andrezj Raczko:

• On quota – we give the resources to the IMF, and we are not fully remunerated for these resources – so we are providing the money
• Population in the quota formula is not useful, we need economic weights only

• This should be only GDp at market exchange rates, openness and reserves

Sony Kapoor:

• This is not the way to look at it, the quota is not economically weighted as it is, and the only users of IMF resources are LICs and they must accept IMF policy conditionality
• Also MICs have been the ones paying for the IMF admin expenses for ages

Ramon Guzman

• Shareholders provide the quota, these are the IMF’s core resources, this is a financial institution like a bank
• Thus the shareholders own the income stream, it is their right
• We will address the IMF’s income sources in time (ref. Crockett report)

Peter Chowla

• The UK’s position is that giving quota to the IMF actually saves money, not costs money – since the remuneration is greater than the cost of managing those resources on their own

Antonio Tricarico

• We all know that the rich countries ignore the IMF and their advice so this is a problem

Italian advisor (male):

• The IMF is important in Italy and that the Italian government/treasury listens to the IMF advice

Ramon Guzman:

• On double majorities – we are not on a blank slate to design an ideal institution, there is an Article of Agreement, so we have to work within those confines
• The IMF is a financial institution, not a political one
• Responsibility and accountability needs to go parallel to financial contributions and decision making structures should make

Sony Kapoor

• But it isn’t a financial institution, the Fund shares can’t be bought by anyone who wants
• The Chinese could buy a 50% share in the IMF with just 2% of their reserves, but you won’t let them

Ramon Guzman

• But this is a financial institution with a public mandate to do things, it is different than other financial institutions.
• We have to mix across three areas of activity (ref. Crockett classification), but it is a single mandate

Peter Chowla

• Lets consider the example of a Treasury in a national capital. It is also a financial institution, with a public mandate but it takes it direction based on democratic principles, the direction is set politically and people are given equal weights

Antonio Tricarico

• Back on the topic of transparency

Italian advisor (male):

• It is the developing countries that don’t release documents, the G7 and European all publish their documents

Peter Chowla:

• Difference between policy documents and country documents

Peter Charleton:

• You can’t expect to see draft documents before the board approves them. They are correct and need to be approved first

Peter Chowla:

• The whole point is for stakeholder participation in policy debates at the Fund, that has to come before the board approves the documents.
• Finally, can we get the EU T.o.R on governance reform

Klaus Stein:

• We just receive the ToR, we didn’t write it. You have to talk to the national capitals
• Basically the content is the same as the EU/German statement to the IMFC, so just reference that if you want to see the position.

Item 2: IMF role in low-income countries

We decided not to discuss this point in favour of furthering the discussion on governance. This should be discussed at the next opportunity.