IFI governance


World Bank-IMF spring meetings 2008

15 April 2008

This page is being updated regularly. Check back for more news about the events inside and around the spring meetings 2008.

  1. Overview
  2. The World Bank and climate change
  3. IMF governance reform
  4. Background papers: Development Committee
    Background papers: IMFC
  5. Highlights of civil society meetings
  6. Highlights of official meetings and communiqués

1. Overview

On the agenda for the Development Committee is achieving the Millennium Development Goals in the poorest countries, and the Bank’s role in fragile and post-conflict states. The challenges and opportunities of higher commodity prices is also scheduled for discussion. The Global Monitoring Report 2008 and the Strategic Framework for Climate Change and Development have been provided as background documents. In the meantime, the dire effect that rising food prices are having on poverty, particularly as a result of increased bio-fuel production, became a key talking point for both the IMF and World Bank (see Rising food prices: Policy options and World Bank response).

On the agenda for the IMFC is expected to be a discussion of the global economy and financial markets, IMF quota reform, and progress reports on the activities of the Independent Evaluation Office.

2. The World Bank and climate change

Climate change and energy have been hot topics at these meetings, heralding proposals for a new Strategic Framework on Climate Change and Development, and a portfolio of climate investment funds (CIFs) (see Update 60), which currently consist of proposals for a Clean Technology Fundand for a Strategic Climate Change Fund . The latter includes a major adaptation component now known as the Pilot Programme for Climate Resilience. Zoellick hosted a ‘Bali Breakfast’ on the Sunday morning ahead of the Development Committee. The Bank will also hold a closed two-day ‘design meeting’ on 14-15 April to move forward plans on the CIFs. These are expected to be approved in record timing by early July in time for the G8 summit in Japan.

3. IMF governance reform

The governance reform deal struck at the executive board of the IMF at the end of March (see Update 60) is being hailed as a great success. At the press conference announcing it on March 28, IMF managing director Dominique Strauss-Kahn indicated that he wasn’t entirely satisfied by the outcome, but he was putting on a brave face in Washington. Boldly proclaiming that “the IMF is back”, Strauss-Kahn thinks that he can make a deal that shifts marginal voting power seem like a giant accomplishment. This of course ignores the purpose of the reform – developing countries to think the IMF is a legitimate institution. A few percentage points is unlikely to do that and developing countries will continue to view the Fund with suspicion.

But with everyone proclaiming the that the deal didn’t reach their objectives, focus is now on the next steps that can be taken. The deal is a bad one and should be rejected. The finance ministers would do well to capitalise on the focus to relaunch more comprehensive negotiations on governance that cover a broader range of issues and that would lead to substantial shifts in power and agenda setting ability.

4. Background papers: Development Committee

Global Monitoring Report 2008 – MDGs and the Environment: Agenda for Inclusive and Sustainable Development

Towards a Strategic Framework on Climate Change and Development for the World Bank Group – Concept and Issues Paper

Background papers: IMFC

Report of the Managing Director to the International Monetary and Financial Committee on the IMF’s policy agenda

The recent financial turmoil – Initial assessment, policy lessons, and implications for Fund surveillance

Report of the managing director to the IMFC on a new income and expenditure framework for the IMF

Progress report on the activities of the Independent Evaluation Office

5. Highlights of civil society meetings

For a complete listing of civil-society events, briefings, press releases, and a blog, see IFIwatchnet.

The World Bank will be posting summaries and/or webcasts of many of the civil society dialogues. Click on the titles below for minutes of sessions by the Bretton Woods Project and other NGOs.

8 April:

10 April:

  • CSO meeting with the Inspection Panel
  • Structural conditionalities in the IMF: A dialogue between the IMF, IEO and CSOs
  • Development results at the IFC
  • Implementing the governance and anti-corruption strategy
  • The use of country systems to address environmental and social safeguard issues
  • IFC and IDA: breifing by the director of the new joint secretariat

11 April:

12 April:

  • How to strengthen extractive industry revenue transparency
  • European NGOs meet with European IMF executive directors
  • Corruption as a barrier to achieving the MDGs: Lessons from the Bank’s India Detailed Implementation Review
  • The influx of capital flows to low-income countries: Challenges and opportunities

13 April:

  • Discussion of World Bank/Bechtel investment in Ecuador’s water system

Return here for highlights of meetings hosted by civil society organisations.

6. Highlights of official meetings

11 April

G24 communiqué: After being blamed for so long for global financial instability, the members of the G24 fired back.

  • They called on the Fund to “urgently improve its surveillance of advanced economies” and “extend its vulnerability exercise [part of annual Article IV surveillance] to advanced economies”. They called yet again for a successor to the Contingent Credit Line (most recently reincarnated as the Reserve Augmentation Line) to reduce their vulnerability to unforeseen shocks, giving a deadline of the annual meetings in October to reach a decision.
  • On reform of the IFIs’ governance structures, the G24 belittled the grandiose claims of the Managing Director by describing the agreed reforms as “some first positive steps” and “still insufficient”. They stressed the importance of a commitment to a “continued process” improving the flaws they see in the new quota formula. They called on the Bank to be more ambitious in its reforms, including the appeal for an additional board chair for the Africans and reform of the selection process of the president; and
  • The third point addressed by the G24 was climate change. They demanded that funds to tackle climate change be additional to existing ODA commitments, and threw cold water on the Bank’s climate cash grab by reminding staff that funding mechanisms “must not lead to the creation of parallel donor-driven climate change strategies” and “could be on lines similar to that of the Adaptation Fund under the UNFCCC process” (see Update 60).

African caucus communiqué

G7 communiqué: The G7 were preoccupied with the Financial Stability Forum report on fixing the turmoil in global financial markets. A coda on the IMF endorsed done deals on quota reform and the new income/expenditure framework. Apparently an early draft which described the quota reforms as a ‘first step’ (as was done by the G24) was rubbished by Europeans worried that this might imply the need for further steps. Shame.

12 April

IMFC communiqué:

  • The committee described the voice reforms as “an important contribution to enhance the Fund’s credibility and legitimacy”. It endorsed the new income and expenditure model. Acrimonious debate lies ahead however, in calls for board work on: policies to govern IMF investment of its reserves; a new framework for setting the interest rates it charges its borrowers; whether or not to pay out dividends to shareholders (a proposal backed by the US); and a review of charges and maturities on Fund facilities. All that in time for the annual meetings in October – not likely.
  • Continued calls came for improved surveillance on financial sector issues, and a report on progress on the perpetually-stalled crisis prevention lending facility by the time of the annual meetings.
  • An appeal came from the committee for the Fund to improve its fundraising efforts to support its work in low-income countries. This will include “a system of graduated charges” for the Fund’s technical assistance.

IMFC statements by finance ministers

13 April

Development Committee communiqué: The DC communiqué covered a series of issues, none in much depth.

  • The biggest buzz in Washington was on rising food prices with president Robert Zoellick showing up at his press briefing with a sack of rice and a loaf of bread in hand (described by one long-time Bank watcher as a ‘brilliant PR stunt by EXT’). The Bank will be pushing donor countries for support for both immediate assistance and longer-term support for agricultural productivity. Lots of support in principle so far, less money in the bank.
  • On climate change, the DC took some of the wind out of the Bank’s sails. There was a call to “elaborate further on the additional financing needs for addressing climate change” and “the complementarities between existing and new financing mechanisms”. This was a veiled shot at the Bank’s threat to run roughshod over established UN mechanisms. Usefully, the committee demanded that all resources should be additional to present ODA levels, and noted the “primacy of the UN Framework Convention on Climate Change”.
  • Nothing more than the usual polite applause for subjects including: Bank work in fragile states, the upcoming High-Level Forum on Aid Effectiveness in Accra, the Doha trade round, Bank work in middle-income countries, and implementaiton of the Bank’s Governance and Anti-Corruption strategy.
  • Finally, a call to reach consensus on a package of reforms to democratise the Bank by the spring meetings of 2009. Same time next year then.

Development Committee statements

Read BWP analysis of the content of the communiqués and the story behind the positions as they come out.