IFI governance

Background

Meeting between UK civil society and Alex Gibbs, UK IMF Executive Director

7 April 2009

15 April 2009 | Minutes

Participants

  • Civil Society: Peter Chowla (BWP), Sam Bickersteth (Oxfam GB), Sharon Sukhram (UNISON), Rachel Moussie (ActionAid), Sarah Edwards (JDC), Paul Talbot (Unite), Katy Athersuch (Stop AIDS), Purna Shrestha (VSO),
  • HM Treasury:  Lindsey Whyte (head of Global Economics), Kate Atkinson (IFM Branch lead), Miranda Schnitger (IMF branch policy advisor), Chris Athayde (head of Development Policy Unit)
  • UK Delegation to the IMF: Alex Gibbs (UK IMF ED); Joe Thornton (UK Del), Katie Fischer (UK Del)

Minutes

1. New IMF resources and their usage

Points raised by NGOs: SDR Allocations

  • Issuing SDRs is welcome, but most of it goes to rich countries 
  • What is the UK’s intention with regard to its allocation?
  • What is the discussion from other countries?

Government Response

Alex Gibbs

  • We are yet to discuss this at the IMF, we need to discuss with non-G20 countries
  • SDRs must be allocated in proportion to quotas
  • UK and others must consider what is the best avenue of delivering resources – reallocating SDRs or delivering other kinds of bi-lateral aid.

Kate Atkinson

  • Work is ongoing on SDR questions
  • We are taking time to consider

Points raised by NGOs: Gold Sales

  • Directing gold sales proceeds to LICs is welcome
  • Concerned about debt burdens increasing with increased PRGF lending
  • We want gold sales to go to debt relief, not more lending

Government Response

Joe Thornton

  • Need a high majority on IMF board for gold sales, there is no broad support for greater debt relief or using gold for this purpose
  • Debt relief doesn’t target need, that can be done more effectively through PRGF

Lindsey Whyte

  • Communiqué re-affirms commitments to financing debt relief
  • Everyone is conscious of debt burdens
  • There are strict legal obligations for use of gold – flexibility is limited

2. IMF respect for core labour standards

Points raised by NGOs:

  • G20 called for statements on best practice on labour standards
  • How is this going forward at IMF? What is the IMF relationship to be with unions?

Government Response

Alex Gibbs

  • UK supports use of ILO standards at IMF
  • the IMF board has not discussed this yet

3. Conditionality

Government points:

Alex Gibbs

  • The IMF has eliminated Structural Performance Criteria, personally UK wanted to go further and drop all performance criteria, but there was no support at the board
  • Recent programmes had extensive macro conditions, but these countries were in crisis/difficult position, they needed this
  • On stigma – Mexico suggests we have solved this with a facility that meets NGO demands on access limits and phasing

Points raised by NGOs:

  • IMF conditionality habit is not kicked, we fear new money will be applied in old way. Rich countries are using counter-cyclical spending.
  • How can the IMF go from austerity conditions to enabling fiscal expansion?
  • Now is not the time to be forcing pro-cyclical spending cuts, this should wait until after the downturn is over.

Government Response

Alex Gibbs

  • Substantial progress on conditionality, some chairs, including some emerging market chairs, opposed further progress on performance criteria
  • Programmes so far have not had inappropriate conditions, countries need fiscal retrenchment
  • In many cases, and with strong UK support, IMF has put floors on social spending and social protection

Lindsey Whyte

  • Countries need to go back to sustain able fiscal positions
  • FCL has shown that IMF is introducing flexibility

Chris Athayde

  • The shift in assessment of conditionality is important – programmatic rather than on individual line items.

Points raised by NGOs:

  • IMF austerity is hitting public sector workers – like health workers
  • Problem of coherence between aid and spending plans and the IMF policies that prevent spending on public services
  • In health – expansion of vertical funds and private initiatives has been at expense of public sector, this is partly due to IMF restraints on public sector spending pushing aid funding towards vertical funds
  • The same is true in education where there have been problems with teacher retention and recruitment
  • We should be looking for fiscal stimulus in developing countries through lpublic sector employment

Government Response

Joseph Thornton

  • The IMF is doing things country-by-country – this is the right approach
  • There are hard constraints on available resources
  • You can’t extrapolate from Latvia case to PRGF programme design
  • IMF programmes attempt to ensure a responsible fiscal adjustment, where necessary, including protecting the most vulnerable groups.
  • Composition of public spending is a matter for country authorities. The IMF has no mandate to discuss composition of public spending.

Alex Gibbs

  • Please let us know where IMF programmes have gotten the balance wrong in specific country cases
  • Real income and the real economy can be undermined by high inflation and out of control spending
  • We ensure each country gets its own programme

Chris Athayde

  • Do not believe that IMF is a significant driver of donor provision of aid through vertical funds.

4. Governance

Points raised by NGOs:

  • We want a faster review of quotas than the one planned
  • Need a single package of reform, want Europeans to announce board seat consolidation at the Spring meetings
  • Balance of rights and responsibilities for countries getting more voting rights – need more transparency and accountability

Government Response

Alex Gibbs

  • We can’t tell how quickly things will move forward, we are sure the quota review will be done by January 2011
  • The Manuel report has not been discussed at the IMF yet
  • All countries have contributed to governance reforms not coming together in a single package – it is very difficult
  • We won’t consolidate EU seats by the Spring meetings
  • Influence of the US as a veto holder is key – this must also be addressed
  • A question of distribution of open chairs if consolidation – who to give them to.
  • Not at all clear that a board reconfigured on the lines NGOs are proposing, i.e. emerging markets had more seats and Europeans less, would have eliminated structural performance criteria

Lindsey Whyte

  • Work on accountability at the national side – need to work in capitals to make sure EDs meet with civil society, report to parliament, etc