The role of low-income countries in IFI governance
•
Sponsor: CIDSE and Eurodad
Chair: Daniela Setton, WEED
October 19, 2007
Issues: (1) IMF governance; (2) IDA governance and LIC participation
Presentations
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
- 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
- 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
- No publicly available operations manual
- Rules on policy making – drafts and consultation
- Release minutes and open public meetings
- Ombudsman process – complaints and investigation process
- Review performance of senior officials on regular basis
Discussion
- 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
- 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
- On legal obstacles to DM – Articles of Agreement can always be reinterpreted – ie example of WB taking up governance issues
- 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.
