Present: Alex Gibbs (ED), Joe Thornton (UKDel Advisor)
NGOs: Rachel Moussie (ActionAid UK), David Archer (ActionAid International), Peter Chowla (BWP)
Opening comments by Alex Gibbs
- The context of the financial crisis significantly changes all of the IMF work, including work on low-income countries. A new lens to view everything
- IMF may have a new financing role now and will also focus on analytical work and coordinated policy responses behind the scenes
1. Lending Facilities Review
Peter questioned future agenda given a less than satisfactory ESF review
- The lending facilities review is a big work agenda with far reaching implications, it will be a significant area of work
- Time frame: between now and the annual meetings 2009. Some items will move on a faster track than others
- The stigma of IMF loans and conditionality will be at the heart of the review. How to make an IMF signal without causing disruptions
- Senior management is open about the review, potential for a far reaching change; the UK is aiming to encourage radical thinking, including pressing on the conditionality issue; people are questioning whether conditionality in exchange for money is the right model any more liquidity provision instrument is on a fast track
- ESF changes went in the right direction, the proof will be in the demand
- On the PRGF, IMF must respond to members´ demands, countries want it
Peter concluded by reminding that NGOs are keen on reforms to end conditionality and some want an end to the PRGF. Said EDs should be cognizant to break down the demands of IMF members in relation to the PRGF – is it TA or advice or a signal or money they want?
2. Wage bill ceilings and other conditionality
David asks about systems for tracking the commitment on end wage bill ceilings and how the IMF will change policies to encourage teacher recruitment and view education as investment rather than consumption
- IMF has internal mechanisms – Strategy and Policy Review department
- The board is also looking at this whenever new programmes come forward
- The IMF does not have capacity on education, the PRSPs and collaboration with WB and others should guide the IMF, the UK is very conscious of these issues
David also asked about the IMF being more optimistic on aid, particularly with Fast Track Initiative money which should not be considered volatile and should be programmed to be spent.
- There might be variation on the treatment of such money across countries, send us evidence if you find this
3. IMF corporate governance
a. IEO report – why an eminent persons committee
- We need to build consensus, it takes time and is hard
- Three legs of work: consultation with external stakeholder, the work of the board committee, and the eminent persons – all must be done; the consultation framework is not in place yet
b. Transparency – recognising a right to information
- Tensions between IMF roles of truth teller and confidential advisor; must be room for confidential work with country authorities
- You have high standards that compromise at the board may not be able to meet.
4. Financial markets
Rachel questioned what role the IMF might play in managing illicit flows and tax evasion and how this effects development. Alex noted Board not currently working on this, suggested follow up with HM Treasury.
Press makes a general point about coordinated policy and regulation including on low-information jurisdictions – this facilitates tax evasion but also the financial intransparency that caused financial crisis
- Gordon Brown has pushed "the early warning system" idea to help policy makers understand risks
- The IMF did detail the risks but maybe it wasn´t communicated well,
- GSFR/multilateral surveillance is better now
- IMF needs to work with other orgs like the FSF to come to a shared understanding of issues
- Example of SWF code is good – IMF serves as a place for discussion, maybe this model can be used for financial crisis?
Peter points out that the IMF has no leverage over advanced economies and is not trusted by developing countries.
- It does all come back to legitimacy in some ways
- An "early warning system" model could use its work with other groups including regulators from all over the world to enhance IMF credibility and supplement its expertise
- The crisis means input will be valuable; people may be ready to contemplate things they would not have before