Meeting date: 13 September 2011, 16:30 BST
Meeting venue: HM Treasury, 1 Horseguards Road, London SW1A 2HQ
Attendees:
Officials: Alex Gibbs (UK IMF Executive Director, by video), Rob Ward (UK Delegation to the IMF, by video), David Kinder (HM Treasury), Azin Pourghazi (HM Treasury), Evangelia Bachtsetzi (DFID)
Civil society: Peter Chowla (Bretton Woods Project), Kate Dooley (Save the Children), Richard Gower (Oxfam GB), Bandula Kothalawala (TUC), Juan O’Farrell (Bretton Woods Project), Rachel Sharpe (ActionAid)
Discussion:
Conditionality
NGO concerns: looking at health spending & IMF programmes; cross conditionality, respect for ILO core labour standards
Alex Gibbs:
- IMF’s 30 August paper uses a comprehensive database to assess impact of Fund programs in LICs and finds that they are associated with increases in social spending
- On conditionality review: overall approach discussion in February; discussion broad scope quantitative and qualitative; some analysis of social impacts, impact of streamlining , 2007-2008 streamlining
- Macro critical conditionality in practice
- Consistency, country circumstances
- Quality of country ownership, flexibility
- Adjustment vs. financing, social impact, financing catalysis
- Impact on growth & poverty
- Late October paper: board meeting pencilled in for November
- Not familiar with all the staff-level discussions on ILO, the IMF-ILO dialogue had work streams and projects were set up, but there have been no recent briefings
NGO concerns on European programmes: insufficient debt reduction, pro-cyclical austerity packages, speed of recognition of debt overhang
AG: rapidly evolving situation, have to be cautious about what is said
- There is a board briefing this week on Greece, can’t add any more to the Fund’s statement
- In general terms: 3 European programmes involve fiscal adjustment
- Large and unsustainable debt positions
- Reforms to boost growth need to be part of agenda, difficult
- Unsustainable fiscal situation coupled with troubled financial sectors
- Let’s not imagine there is another easy option
- International banks, implications for other countries
- Too simplistic to say there is easy alternative to IMF program
- It’s true that the fastest you can make the intervention the less the cost, could have been less costly if Greece came to the Fund sooner
- Implications for Greece are costly and complicated
- Scale of adjustment reflects position of Greece
- I take the points you are making but hear range of views from other directors, including the one representing Greece; should not impose solutions that are not country-owned
Financing for development
NGO points on financial transaction taxes (FTTs): IMF work is interesting, can IMF show leadership?, need clear delineation of FTTs on stocks and bonds vs. currencies
AG:
- We haven’t spent time on this in the board recently
- UK position, open to consider this, but for FTT to be effective it needs to be done at a global level
- UK will not support EU proposal because it is not global
Officials:
- IMF work is not an endorsement of FTTs per se
- French presidency keen, international level has some good ideas
NGO points on gold sales: interested in timeline for decision, want money to go for debt clearance not PRGT
AG:
- The board is divided, majority prefer precautionary balances or investment account
- UK view: use for PRGT trust for LICs; a number of other chairs, including African countries, support this
- CSO view is unfortunate, no chair that advocates use for debt relief, would be helpful for CSOs to support broader use for LICs
- IMF process: it is sitting in general reserve now, as there is no consensus it will stay there; We will come back to it in a year
IMF fragile states policy
NGO concerns: want to know about IMF position, reason for unwillingness to do more work
AG:
- Discussion of fragile states engagement was Lagarde’s first meeting at the board
- No decision making, different perspectives at the board
- Some chairs expressed scepticism that this issue was within the Fund’s mandate, although UK and others thought it was part of the IMF’s core mandate and encouraged Fund to improve their engagement and awareness
- Some scepticism about effectiveness of RCF and how to improve this
- Process
- Revised operational guidance coming soon
- Review of RCF will be rolled into the broader review of LICs facilities (ECF, RCF, SCF) next year
Governance and Leadership
NGO points: disappointed with the process and position of European countries in regards to MD selection, also very dissatisfied with the deputy MD selection processes
AG:
- UK supported Christine Lagarde because she is the best candidate on merit, not working for any agenda for Europe, we didn’t co-ordinate in Europe, UK would have been prepared to support a non-EU candidate in the absence of Lagarde, misrepresentation of the process to describe as ‘stitch-up’
- MD appoint the DMDs, not the board; I cant change the constitution of the Fund to give the board the power to appoint DMDs
Capital flows framework & international monetary system
NGO points: How is the G20 process working with the IMF process?
AG:
- G20 process hasn’t been discussed with the board, this is a long term agenda; as ED at the Fund, not personally involved in the G20 though some board members also serve on the G20 working group on the international monetary system
- SDR, complex issues, there is no consensus, the composition of basket is a concern, long discussion of Yuan
- Financial Safety Nets: not much discussion recently, no rapid progress because of coordination difficulty with regional agendas
Domestic revenue mobilisation
NGO points: tax policy as a means to address equity issues; Topical trust fund $30 million: update on countries, progress?
Officials:
- DRM themes at Board discussion: use of VAT in LICs and question of regressiveness, staff emphasis on expenditure context in determining appropriateness of VAT
- On taxation of multi-country corporations, all countries struggle with ensuring fair share is paid and even more difficult in developing countries
- Desire to do work on taxation on mining (Zambia and Sierra Leone)
- Staff doing work: further board discussion late 2011-early 2012
