The role of low-income countries in IFI governance

World Bank-IMF annual meetings 2007

26 October 2007 | Minutes

Sponsor: CIDSE and Eurodad
Chair: Daniela Setton, WEED
October 19, 2007

Issues: (1) IMF governance; (2) IDA governance and LIC participation


Daniel Bradlow – on quota reforms and other aspects of governance to enhance LIC participation

  • For quota reform to change things:
    • need a general increase with some countries not taking quota; but can’t have big enough increase to impact vote distribution
    • LICs have to put up money to get an increase in their quotas
  • Or can increase basic votes
    • But BV proportion decreased to 2.1%
    • And need an amendment to the articles to change this – very difficult to ratify – ie in US Senate and Congress
  • Board decision by consensus – so vote changes don’t change much
  • So what is possible to enhance LIC participation? How do we improve the role of LICs in the governance of the IMF?
  • Key elements of good governance – transparency, predictable decision making, reasoned decision making, participation, accountability
  • Things that can be done / proposals (by board only):
    • Increase diversity of the staff – nationality and skill sets
    • Increase senior advisors for EDs
    • Change way to determine sense of meeting – double majorities
    • End principle of uniformity – distinctions between users of resources and non-users
  • Transparency issues
    • No publicly available operations manual
    • Rules on policy making – drafts and consultation
    • Release minutes and open public meetings
  • Accountability issues
    • Ombudsman process – complaints and investigation process
    • Review performance of senior officials on regular basis


  • Question on regional alternatives:
    • This works for Lat Am MICs, but not universal – ie Africa stuck with IMF
    • Still need a global institution on monetary and finance – need something
    • Should reform because it is important, even if it is limited
  • Question on poor Caribbean countries
    • Yes small islands get left out, swamped out by Brazil etc
    • Education can help – need to

Double majorities and consensus building

  • DSK proposal is for DM based on directors, not member numbers
  • Peter explains numbers on directors
  • Point on negotiating strategy – and exchange of views at the IMF
    • Consensus formed in some ways
    • Rich countries take orders from home – less flexibility
    • They can use this as a power play in negotiations

Representation of small countries

  • Sometimes small countries like to be represented by G7 country because it can influence opinion
  • But they have no seats in some cases – no advisors or anything
  • We are assuming the board members want to represent their constituency. At WB on Inspection Panel – they weren’t actually interested in finding problems

Aldo Caliari – on LIC representation

  • EDs office too busy – dealing with so many countries, that EDs and ministers cant come is emblematic of the problem
  • Inequality is worsening in the world, LICs are getting poorer – the IMF approach will reinforce this because formula will be based on economic size
  • 90% of number of loans are to LICs
  • African EDs – highest concentration of client countries
  • Quota formula – to much weight on GDP at market exchange rates
    • Openness is detrimental to LICs because of method of measurement
    • Variability is similar – not specified correctly – too short term for example
    • Demand-based variables versus supply variables – the weighting is wrong
  • Three goals for quota formula is too many with one instrument – need to decouple
  • Basic votes – unique way to handle representation that bypasses other problems
  • Double majorities – read the paper on the BWP website
    • On legal obstacles to DM – Articles of Agreement can always be reinterpreted – ie example of WB taking up governance issues
  • Sense of a meeting could be used to split votes
  • IDA governance
    • IDA donors are powerful to set policy direction of IDA and even for whole WBG
    • No point in full subscription, because still get excluded from decision making
    • Membership shares used to supplement basic votes – but same problems cited by Danny on BV
    • Dv countries invited to IDA discussion – not decision of LICs, decision of donors

Daniel B – MICs not great at representing LICs

From Mozambique – African governors asked for reform, but the question is how.
            Northern governments set the agenda, so Northern CSOs have a good role to play

Egypt youth CSOs rep – capacity issues even in MICs, no tools/understanding of problem

Celine – system is fundamentally undemocratic, need to demand reform based on principle.

Carribbean guy – why don’t World Bank and IMF help poor?

Vitalice – forums for poor African countries are limited – they can’t really demand reform; continent is very diversified. Need to provide effective forums for them to articulate issues.

Daniela – role of IMF should be matched to governance; if we want to get IMF out of low-income countries then maybe that is better to reduce harm

D Bradlow – LICs still need foreign exchange, they aren’t getting enough money some way sometimes. DV Govts should be sure that they really need to money first. IMF can work as a catalyst.

Aldo – countries are stuck with the IMF for now. Especially LICs, but even MICs might need liquidity in the future.

Vitalice – IMF catalyst role for getting aid and other things delivered; have to be careful about asking IMF to get out of LICs; need to have institutions to substitute for the roles of IMF

Another person (Zambia?) – important to get IMF/WB targeting resources to poor people. IMF signalling role is not helpful – if donors cut, people suffer but government does fine as it can get resources from elsewhere.