IMF presentation

Proposed approach

• Looking at conditionality embedded in programmes, and overall programme design, implementation and outcomes
• upper credit tranche only – not low access programmes or stagg-monitored programmes Quantitative and structural, including prior actions, indicative targets

Method

• MONA database for quantitative analysis
• Selected country cases – ex-post assessments
• interactions with staff, shareholders, stakeholders (NGOs, CSOs. thinktanks, donors, multilateral agencies) – comments until May 31.
• Mid 2000s- Feb 2011 = period covered

Differences from previous

• ‘More interactions’
• Content – adjustment versus financing balance + social protection and poverty reduction

Background papers

• Content and application of programme conditionality (consistent with programme goals and IMF guidelines) including some specific areas: discontinuation of structural performance criteria; social protection – how was it addressed?; public wage bill ceilings.
• Programme design and implementation (tailoring of design to: balance between adjustment and financing; support for sustainable economic recovery; inclusive growth. Implementation – impacts of streamlining, ownership, flexibility. Specific issues – macro-financial linkages and international spillovers; composition of fiscal adjustment; social impact of policy measures; 2009 special drawing rights (SDRs) – did this impact design and implementation).
• Programme outcomes (Macro outcomes: GDP growth; inflation; current account balance; fiscal balance)

Questions

Gender must be included from the beginning

Ownership more than just government – also include people in the country

How to consider impacts of IMF programmes on political economy of country – stronger the more austere the programme is

Why not look at discontinuation of conditionality – compromises democratic ownership – African governments have called for this: moving from conditionality to partnership

Bangladesh – IMF conditionality imposed on government to raise tax and revenue base. No CSO consultation, though corporate sector was consulted.

Structural issues may have crept back in – how do we know streamlining has taken place. Could look for example at the number of person hours per programmes.

Balancing conflict of interest between pubic and private interests? Ensuring that CSOs will not be harmed during these consultations.

IMF response

Very different views on issues related to conditionality – question is about balance

Private sector important stakeholders including banks and financial markets.

Programmes not focussed on gender – but try to support social protection

Ownership is one of most critical and difficult elements to assess – ownership is prior as government is asking for the programme

Doubt that IMF can get rid of conditionality. External tool that authorities use to get the reforms moving – in the face of stakeholders not very happy. Conditionality should focus on the things that are very critical More timeconsuming to design a streamlined programme than less streamlined one.

Questions

In Latin America – question of stability is important, but countries’ economies have been based on natural resources: hasn’t led to sustainable development. IMF hasn’t helped in thinking about added value, industrialisation. How to add value, create industries

Baseline projections of impacts on social and economic – what would happen if conditionalities not implemented. Is increased flexibility just an outcome of the crisis or a deeper change? Macroeconomic stability considered more important than impacts on most vulnerable.

Ownership much more than governments requesting programmes – impacts the politics of a country deeply – political parties popularity, government’s ability to force through unpopular measures etc

IMF response

Have been thinking a lot about social and economic indicators

Difficult for IMF to go on the ground – use views of Resident Representatives, views of CSOs etc. Will have to use second hand sources of information

Different views – opposition to conditionality vs support for social impact conditionality

Questions

Privatisation – are you also considering empowering nationalised industries to provide more jobs?

Certain policies have massive impacts on society – can be good, can be bad. Surely it’s possible to engage other agencies to get real feedback from people, not just go through government. Tools are available – it’s not really that difficult.

Mainstreaming gender – programmes have to have a human face – need social indicators. This is why Bank and IMF have negative impact.

IMF response

Listen to NGOs, talk to think tanks, financial sector, private sector – trying to go beyond the views of the government. PRSPs have an extensive consultation process: requirement for programmes.

Don’t have the staff resources to have an idea of impact in all countries

Social indicators are very important – indicative indicators assess progress on health and education.

Not specifically targetting gender issues – looking at overall impacts of macroeconomic policies, which we hope will have an impact on women.

Questions

Need to strengthen component on social protection

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Need to distinguish between ownership of macroeconomic framework – important that conditionalities do not impact this. How has conditionality impacted on countries’ ability to own its own framework Social outcomes – hasn’t been considered until now: do you regret not having considered it at an earlier stage.

What impact has competition from China and other donors caused?

IMF response

Process of considering conditionality predates rise of Chinese lending

Social outcomes – last couple of years has seen rise of increased spending on social issues in IMF programmes. Already done some preliminary analysis – even in the aggregate social spending has increased in IMF programmes in the past few years.

Questions

is there really an open mind? Some answers seem to be defending the IMF

Social impacts – point is not to add more social conditionality but to really understand the social impacts, gender impacts of all conditionalities

VAt rises, fuel price rises in some countries have had significant impacts on the poorest, also impacts democracy as can be very unpopular. Ex ante analysis should look at social effects.

IMF response

Fuel prices – there is a global issue too. In specific countries, IMF has supported view that poor should be protected in any fuel price increase.

Looking at issue of ex ante impacts – may not have ability to do it in this review, but IMF is looking into it.

Trying to make an effort – have learned lessons from earlier programmes: partly for others to decide if this is in good faith.

Questions

Gross national happiness index – an example of broader thinking about impacts. Could this be an additional indicators

Importance of ethical business practices within conditionality – don’t see this reflected. Financial markets – impacts of programmes on these: should look in context of how financial markets respond to the programmes. Needs to be anticipated. Haven’t seen suggestions for regulation of financial markets within conditionality to prevent speculators having an impact on countries in distress.

Will macroeconomic discipline come from within in developing countries? Need external force. Policy space is important – flexibility needed to give this importance.

IMF response

Would need to lobby IMF membership to introduce broader thinking like gross national happiness

Financial markets – will try to look at the impact. Difficulty is looking at very high frequency data, timing of information (whether anticipating programme etc)

Financial regulation – included in some programmes. Globally looked at more through surveillance function.