IFI governance


Highlights of BWI-UK / UKAN Workshop: The roles of the IFIs in low-income countries

1 May 2007

9 May 2007 | Minutes


Romilly Greenhill, ActionAid UK
Gideon Rabinowitz, ActionAid UK
Jeff Powell, Bretton Woods Project
George Gelber, CAFOD
Kadi Jumu, Christian Aid
Kato Lambrechts, Christian Aid
Helen Leake, Forest Peoples Programme
Trisha Rogers, Jubilee Debt Campaign
Charity Musamba, Jubilee Zambia
Wahu Kaara, Kenyan Debt and Development Network
Susanna Mitchell, new economics foundation
Paolo de Renzio, ODI/Oxford
Claire Wren, One World Trust
Robin Robison, Quaker Peace and Social Witness
Sarah Hague, Save the Children UK
Elisa Van Waeyenberge, SOAS
Celine Tan, Third World Network
Joanne McGarry, Trocaire
Sarah Mulley, UK Aid Network
Peter Hardstaff, World Development Movement
Elena Chiarella, World Vision UK

Session 1: Aid Architecture

The discussion of the place of the IFIs in the aid architecture looked primarily at the role of the IFIs as donor agencies (i.e. as providers of concessional finance) and focused on three main questions:

  • How are the IFIs positioning themselves for the future?  What kind of roles will they play in the aid system?
  • What role do we think they should play in the aid system?
  • What reforms are needed now to make them ‘fit for purpose’ for their future role?

We heard from Wahu Kaara from Kenya, who made it clear that the IFIs are not currently addressing the challenges of poverty and injustice at country level.  She perceived a real chance that they would be superseded by alternative (domestic) sources of resources, and encouraged us to think about the fundamental architecture of the system.  Paolo de Renzio from ODI/Oxford identified several factors at the international level driving change: the IFIs’ ongoing crisis of legitimacy, and arrival of new actors in the aid system (e.g. China, Gates Foundation), reforms at other multilateral institutions (esp. the EC and UN) and potentially the emergence of new ‘fashions’ in aid (e.g. performance-based aid).  He suggested that the key challenge is to make aid more accountable to poor people, and to ensure that it delivers long-term sustainable change at the country level.  Multilaterals, including IDA, could be a part of the solution.

We discussed the importance of alternatives in the aid system – recipients need to be able to choose donors who meet their needs, and donors could be encouraged to improve their performance through competition with others.  A number of people felt that it was important to promote alternatives to the IFIs (both domestic and international), with the caveat that alternatives must be accountable and effective.  It was noted that some alternatives (especially bilateral donor agencies) were both less accountable and less effective than IDA.  Ultimately, people felt that change had to be driven by governments in recipient countries, but the group also felt that donor governments had a responsibility to promote reform.  Some specific ideas were discussed, including the question of whether IDA should become independent of the rest of the World Bank.

This discussion will feed into long-term thinking about the IFIs and the aid system being carried out both by UKAN and by BWP.

Session 2: IMF financing and the PRGF

Building on the morning’s discussion on aid architecture we tackled the question of the IMF’s role in low-income countries. The recent reports on the Fund’s strategy and reform – the IEO report on aid, the Malan report on Bank-Fund collaboration, and the Crockett report on Fund finances – all point to the need to rethink the IMF’s role in low-income countries. Sarah Hague gave two basic options given the IMF’s inability to grapple with poverty: either put poverty into the IMF through knowledge and staff or take macro economics out of the Fund and put it in aid institutions. Kato Lambrecht outlined the effect of the signalling role of the IMF, particularly focusing on Africa. She proposed that the IMF should become 1 of many institutions doing analytical work on macroeconomics.

The conversation focused on two aspects of the IMF work in LICs: lending and signalling. On the first, after recognizing the limits of IMF competence and mandate as well as need to reform and separate out IMF functions (ref. Malan and Crockett reports), there was consensus of organisations in the room that we should advocate for an end to finance through the PRGF. The main question then was how to go about ending the PRGF. More strategy needs to be prepared.

On the second topic of signalling, there was consensus that the IMF is sending the wrong kind of signals with its work in low-income countries: namely that they focus on fiscal austerity and business environment, but not on development or poverty. There was no consensus on an alternative for such signalling, but there was some recognition that we should not be advocating for each donor to be conducting its own macroeconomic analysis – in essence – “crawling all over the books” of a developing country. Suggestions were aired on whether another multilateral/UN agency could perform this function better.

To move forward we have two things: (1) an effort to somehow collate and better publicise the examples of how the IMF gets things wrong to make a stronger case against the PRGF and the signalling role; and (2) a rough working group on advocacy to end the PRGF including Romilly/Akanksha from ActionAid, Kato/Olivia from Christian Aid, Sarah Mulley, Sarah Hague, Celine Tan, and Peter Chowla.

Session 3: Knowledge roles of the IFIs

‘Soft conditionality’ will become more important as the Bank (and especially DFID) feel more pressure over explicit conditions.  The quality and objectivity of WB research has been brought into serious question by two key studies – that by Robin Broad at American University, and the official evaluation of WB research led by Angus Deaton (see BWP articles on these). 

The volume and reach of Bank (and now Fund) technical assistance (TA) is growing rapidly.  Many examples were discussed from around the world illustrating how research/TA influences the policy reform process. Need to strengthen resources at national level or else IFIs will always have excuse that no one else is capable of providing the needed training/analysis etc..   

DFID action: 

New ‘how-to’ guidance note on TA says that it should not be linked to conditions.  DFID will review TA end 08.  UKAN sub-group led by Romilly Greenhill at ActionAid already planning influencing strategy.  Research has been commissioned by ActionAid to attempt to map DFID TA procurement to IFI conditions.  DFID knows they are vulnerable on TA, with contracts going overwhelmingly to UK contractors.

DFID is also a massive supporter of WB trust funds which support TA.  WDM has focused on a particular ‘problem’ trust fund which the UK backs – the Public Private Investment Advisory Facility (PPIAF).  Need to push DFID on timely, transparent and clearly accountable reporting on trust funds (currently buried in regional programmes).  More work on ‘problem’ case studies needed stressing responsibility for failed TA – suggested that one should be in a post-conflict country (Timor L’este or Sierra Leone for example)  since it is in that environment where IFIs/donors have taken a ‘tabla rasa’ approach to reforms.

WB/IMF action:

One of the indicators of the Paris declaration is on the need to reduce parallel structures.  The Bank is the second worst of all donors on this count.  Need to push on this and on the critiques of Bank research.  Case study research like what was suggested for DFID would be useful (but no takers on that yet!)  UK is an ally in putting financial pressure on WB/IMF administrative budgets which support TA (and both institutions are vulnerable on this front currently).

Session 4: World Bank governance

Need to make this a political issue since otherwise ministers will not engage.  There is a gap between London and UK delegation in Washington.  Sarah Mulley believed that we should not downplay the importance of ‘informal’ changes (such as transparency and staff diversity) as opposed to ‘formal’ reforms (such as board structure and voting formulae).  Jeff Powell outlined the various reform proposals, their potential impact, fit with UK NGO objectives, and difficulty of driving them through (see background paper). 

Actions agreed:

Campaign – ActionAid, QPSW and maybe JDC (?) looking to conduct campaigning activities (email, postcards, etc.) in run-up to annual meetings in October.

Intelligence gathering – there is a need to gather intel on country positions, especially southern, on the various reform proposals.  ActionAid and BWP will take this forward.  Nb. on transparency, need pressure from southern CSOs on their governments who are the main obstacles.

UK advocacy – there was agreement that we should continue to push leadership selection and board transparency/accountability; symbolic support for an end to the appointed UK chair and for consolidation of European representation; and support double majority as a practical, but by no means satisfactory, movement towards democratic representation. 

Robin Robison of QPSW proposed that an event with high commissioners in London might be a useful way to raise the profile of the issue.  Oneworld Trust and BWP would support QPSW on this.