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World Bank-IMF annual meetings 2012

16 October 2012

  1. Pre-meetings background
  2. Agendas and background for papers for committee meetings – IMFC and Development Committee
  3. Highlights of official meetings and communiqués
  4. Highlights of civil society meetings, and other meetings and seminars
  5. Conclusions and wrap-up

1. Pre-meetings background

The 2012 annual meetings of the World Bank and IMF will take place from 9 to 14 October in Tokyo, Japan. You will be able find links below to analysis of the communiqués as well as notes of some of the civil society and official meetings, as they become available. The sovereign debt crisis in the eurozone will again be a key topic, but with a new focus on jobs because of the timely contribution of the World Development Report on the topic. Additinally much attention is being focussed on World Bank president Jim Yong Kim’s first annual meetings speech in the job, with the expectation that he will set out a more comprehensive reform plan for the institution when he speaks to finance ministers on Friday morning.

The IMF’s focus will be on the ongoing eurozone crisis and in particular the Fund’s role as ‘junior’ partner in the Troika, the grouping of the European Central Bank (ECB), European Commission and the Fund, bailouts that have so far failed stem the deteriorating economic and social situation in a number of countries. Concerns that the Fund has bitten off more than it can chew have been stirring for some time, including the resignation of a veteran staffer because he was “ashamed” of the role it has played. Recent articles in the press (for example Economist, Financial Times) have called for the Fund to re-think its role as an active participant in the Troika, in favour of an advisory function.

Fund staff and member delegations will most likely have their hands full trying to develop a common position and communiqué on quota and governance reform as the deadline to achieve changes agreed to in 2010 expires in October as the annual meetings convene. The BRICS nations (Brazil, Russia, India, China and South Africa) that provided increased financing to the Fund as it dramatically increased its lending, secured agreement that the over-representation of rich nations in the Fund’s governance structures, in particular European states, would be reduced in favour of greater developing country voice and voting power. As yet the United States has failed to ratify the agreement in Congress, preventing its implementation. It will be important to see whether developing nations will be satisfied with the strength of US commitment to see the reform process through. Whispers may also be running through the delegates corridors about the looming executive board discussion to set an “institutional view” on capital account management, which looks to be contentious given the entrenched views on both sides. The Fund is also expending energy talking about the potential affects of the US ‘fiscal cliff’ at the end of the year – when spending is set to drop dramatically because of political failure to agree a budget.

At the World Bank, the official agenda will focus on jobs, as the World Bank launched its biggest ever analytical work on employment issues on 1 October in the form of the World Development Report 2012. Trade unions and other civil society organisations seem to be cautiously welcoming some of the messages coming out of the report, especially its focus on “good jobs” (also called decent jobs by the UN) and how the evidence doesn’t back up the idea that cutting labour regulations boosts employment. The WDR will be discussed at the Development Committee meeting, but the Bank has not been forthcoming with drafts of an implementation plan for turning any good conclusions from the WDR into Bank programme reform. A particular area of concern is on the Doing Business Report produced by the Bank’s private sector arm, the International Finance Corporation (IFC). Its approach has been heavily criticised, and its focus on labour deregulation rejected.

The official Development Committee agenda also includes background papers on disaster risk reduction (DRR), the corporate scorecard, and an update on implementation of the gender equality agenda at the Bank. However a few main topics have been left off the official meetings agenda. Like last year, there are a few hot button topics which have been ignored by the officials. Notably missing from the official agenda of the Development Committee is a discussion of land issues and food prices. With the Bank’s food price index spiking to a new record this year, this will be a topic that is of fundamental concern to poor people throughout the world. But even more important is the opposition of the global ‘land grab’ that this has fueled. Some campaign groups have launched a new campaign calling for a 6-month moratorium on large scale land acquisitions funded by the Bank, while it irons out its policies and guidelines on these isssues. Also excluded has been any concern or analysis of the trend for IFC intervention in the mining sector. Mines funded by the IFC have been at the centre of violent protests in recent months. The official sector also neglects mention of the upcoming World Bank safeguard review, which is animating much of civil society discussions.

Bretton Woods Project’s detailed analysis of the content of the communiqués for the G24, IMFC and Development Committee meetings will be available when each meeting is complete.

2. Agenda and background papers: International Monetary and Financial Committee (IMFC)

The agenda for the autumn 2012 International Monetary and Financial Committee meeting, scheduled for Saturday 13 October, is now available on the IMF’s website. Some of the papers for the meeting are now available, including:

Agenda and background papers: Development Committee

The agenda for the autumn 2012 Development Committee meeting, scheduled for Saturday 13 October, is now available. The background papers include the following:

3. Highlights of official meetings

We will bring you the highlights from the communiqués at the annual meetings – including the G24, IMFC and Development Committee – as they happen.

10 – 13 October: Programme of seminars

11 October: G24 communiqué (deeper analysis, original document).
Summary: The G24 grouping of developing countries at the IMF and World Bank has the first ministerial meeting. Their statement, while focusing on two longstanding G24 concerns regarding IMF governance reform and the anticipated gap in financing for key infrastructure, has less to say than in previous editions regarding capital account management given the upcoming institutional view. Given Brazil’s and other nations’ vociferous focus on this issue over the past two years, it suggests that either the fundamental negotiations may already have been completed, though we understand that the IMF will still produce one further analysis of the issue and discussions are not yet complete, or that they are holding their fire for an as-yet unspecified reason. Instead, space was devoted to reiterating G24 demands that the IMF’s 2010 commitments to quota and governance reforms be met. The deadline will pass this month and requires the United States’ approval – which cannot be provided given Congress is not sitting during presidential elections. The other focus of the communiqué signaled that the G24 is “extremely concerned” about gaps in aid. It reiterates the view that the World Bank needs to increase in size – a worry for some civil society groups, as will be the encouragement given to increasing reliance on private finance to meet the resource requirement of investing in infrastructure.

11-12 October: G7, G20 and BRICS finance ministers meetings (deeper analysis
Summary: These three groups had informal meetings, on Thursday and Friday but issued no formal statements.

13 October: IMFC communiqué (deeper analysis, original document).
Summary: The IMFC is the direction setting body for the IMF. This year’s statement was seemingly designed to avoid substantial comment. Despite the controversy elicited earlier this week by the Fund’s release of the World Economic Outlook, in which it sought to account for the higher-than-anticipated negative impact of fiscal consolidation and austerity on countries’ growth, the statement restricts itself to noting that fiscal policy should be “appropriately calibrated to be as growth-friendly as possible”. However, it indirectly does reference this concern when assessing emerging market and developing countries’ prospects, accepting that slowing activity in those states is in “some cases” a reflection of “policy tightening.” It discusses the failure so far to ratify the 2010 quota and governance reforms, which actually refers to the United States who has yet to do so as it requires Congressional approval, by calling on its members to “complete the necessary steps.” What no mention is made of is the institutional view on capital controls. This statement of the Fund’s official stance is expected later this month and is a subject that has been discussed intensively for the last two years, with divergent views amongst the IMFC’s members – notably from Brazil. Could it be that this is also set to be delayed as final agreement is still too far off?

13 October: Development Committee communiqué (deeper analysis, original document ).
Summary: The Development Committee is the direction setting body for the World Bank. The Development Committee communiqué, like the IMFC statement from the morning, was also low on content and high on simple acknowledgement of the work the Bank was doing. In particular there were statements in support of the WDR on jobs (without reference to any change in Bank practice) and gender (with a call for further progress reporting next year), as well as a statement in reference to president Jim Kim’s agenda giving “support [for] his vision of a WBG that focuses on impact, provides evidence-based assistance with integrated development solutions to its member countries, and promotes global public goods.” The Development Committee also endorsed the Bank to “provide support to countries that want to use natural capital accounting”.

Please see our in-depth analysis of all the communiques with more information on the background to these positions and why they are important. The communiqués coverage will be updated throughout the meetings.

4. Highlights of civil society meetings and other seminars

For a listing of civil-society events, see the Bank Information Center website. The World Bank lists events taking place in the Bank’s Civil Society policy forum. We will be posting notes of meetings attended by Bretton Woods Project and partner organisation staff, so check back often for more details. Full listing of the official Programme of Seminars (POS) is available on their website.

Below we will post notes and minutes of sessions attended by the Bretton Woods Project:

09 October

10 October

11 October

12 October

13 October

Presentation – Alf Jerve, BIC: Lessons for safeguard policy

 

5. Conclusions and wrap-up

The World Bank/IMF annual meetings in Tokyo concluded on 14 October, but there was comparatively little to show for all the effort of gathering the world’s finance ministers, central bankers, officials, journalists, bankers, and civil society organisations in East Asia. The official meetings themselves produced little concrete in terms of how the World Bank and IMF will conduct their work for the foreseeable future. The most talked about issues were the IMF’s admissions of errors in economic forecasting and the speech by World Bank president Jim Yong Kim which set out his vision for the Bank.

First, on the IMF side of things, the controversy over ‘fiscal multipliers’ used for economic forecasting (see article) threatened to engulf the entire meetings in flames. When the IMF admitted that it had underestimated the negative impact of austerity policies, and suggested that this error should bring a rethink of the timing of austerity policies in Europe, the worry was that the Fund would find itself in strong opposition to Germany and European institutions like the European Central Bank. In the end IMF head Christine Lagarde made a good show of papering over differences with German finance minister Wolfgang Schäuble in their televised debate. With that encounter safely behind them, and a show of rhetorical solidarity, the IMF will now return being the junior party in European loan packages. The question remains how strident it will be in taking its new found dislike for quick and deep spending cuts into the four-party negotiations that characterise European programmes in Greece, Portugal and Ireland.

Meanwhile, the debates occupying the Fund’s staff and board for the next three months – over the formula that determines IMF voting rights and the IMF’s institutional view on capital account policy – were noticeable for their near absence in discussion. And while civil society worked with UN bodies to press again for reform of the international financial architecture to include a standing mechanism for sovereign debt workouts, this call seemed to be failling on deaf ears within the Fund. To please civil society, Lagarde and the UK and French finance ministers spent some time trumpeting the IMF’s decision to allocate the windfall profits from IMF gold sales to further subsidies on IMF loans to low-income countries.

Over on the World Bank side of the ledger, there were few expectations of decision making as the gathered audience was waiting for president Kim to spell out his vision for the institution. In the end, his plenary speech (transcript) was a bit underwhelming despite the soaring rhetoric of an end to absolute poverty and the need to remake the World Bank into a “solutions bank”. These rhetorical devices seem to have clearly convinced Bank staff and won them over to his cause (perhaps not a hard sell, as he is the first development practitioner to be in charge at the Bank), with all Bank staff in Tokyo wearing identical t-shirts promoting Kim’s marketing campaign, ‘What will it take?’, on Thursday 11 October. To achieve these goals Kim’s focus will be on (1) the results agenda, including a hard target for ending absolute poverty and building shared prosperity; (2) streamlining procedures to strengthen implementation; (3) providing integrated solutions across the World Bank Group; and (4) investing in data and analytic tools. While the calls in the speech for reforming the Bank’s internal incentives are welcomed by those who have criticised the Bank’s skewed structures for years, they hardly amount to a revolution in the Bank’s focus from previous president Robert Zoellick’s agenda. And at least one development thinker, Owen Barder, Europe director for think tank Center for Global Development, expressed his “serious doubts” about the solutions bank concept, saying: “Solutions emerge from internal processes. They are not things that can be put in banks.”

In fact, throughout the week Kim was at pains to stress that he wanted to see private-sector led growth as the means to eradicate poverty, provoking unfavourable comparisons to the positions taken in his 2000 book Dying for growth: Global inequality and the health of the poor. In a session with civil society Kim refused to publicly commit to the end of user fees for World Bank-backed health programmes, though did say he would aim to achieve the end of fees at the point of care. Likewise on the safeguards front, Kim said the upcoming safeguard review had “no intention” of diluting safeguards, but he failed to guarantee that safeguards would not be diluted. He also shocked some observers with his statement that the the World Bank was now committed to being at the forefront on climate change. Few doubt Kim’s personal commitment to tackling climate change, but he seems to have little awareness on just how deeply the Bank has been and continues to be complicit in funding climate-changing inducing activities. While Kim stressed his credentials as coming from civil society all week, few would have left the annual meetings feeling as if he was aiming for deep reform at the Bank.

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