Gender

News

Annual meetings 2012: communiqués coverage

13 October 2012

  1. G24 communiqué (11 October): analysis, original document
  2. G20, G7, BRICS informal finance ministers meetings (11-12 October): analysis, no document expected
  3. IMFC communiqué (13 October): analysis, original document will be linked when available
  4. Development Committee communiqué (13 October): analysis, original document

G24 communiqué (11 October)

The G24 is a grouping of some of the most important developing countries in the World Bank and IMF. It includes India, Argentina, Brazil, Mexico, and South Africa, who are also in the G20. It also includes Egypt, Iran, Nigeria, Venezuela and a number of other countries. The G24 communiqué is traditionally the first statement of the meetings.

Its communiqué focused on two principal and longstanding, issues. First, it again devoted considerable space to the need to “reiterate the importance of meeting the forward-looking commitments of 2010 IMF’s quota and governance reforms” and connects these issues to the Fund’s future “effectiveness and legitimacy.” This reminder was consistent with previous communiqués, which also stressed the importance of meeting these commitments. Second, the communiqué uses strong language to signal its concern over finance shortfalls, saying the G24 is “extremely concerned” about gaps in aid. Its calls represent a concern for many civil society organisations, who have previously worried about calls to increase the role of multilateral development finance institutions, including the World Bank. It “calls on all donors to meet their commitments fully and on a timely basis.” Again, this is an issue to which the G24 have returned, strengthening their language and level of emphasis.

The G24 argues that the ultimate goal of governance reform must be to “better reflect the growing role of EMDCs [emerging markets and developing countries] as a whole in the global economy, while enhancing the voice and representation of poor and small low- and middle-income countries.” They point to GDP at PP terms as the most “robust measure” of comparable economic weight and describe it as “imperative” to increase this metric’s role in the formula that calculates governance representation. Given that these reforms had been agreed in 2010 to be in place by this month, they warn that the failure represents a “serious reputational risk for the Fund.” They link this reputational risk over incomplete governance reform to the Fund’s ability to conduct “even-handed” analytical work and advice when conducting surveillance, questioning how much “effectiveness and traction” the Fund can hope to have when needing to “engage effectively with members.”

Though the G24 reiterates their “strongly held view” that financing from IFIs must be based on development merits, rather than “political considerations”, the communiqué calls for new solutions to “boost the financial capacity of the World Bank and IFC.” The communiqué takes an accommodating stance toward inviting private finance to meet the challenge of a “significant mobilization of resource and investment, especially in infrastructure.” Anticipating “a large financing gap”, the communiqué calls for “enhanced public-private partnerships” though it does reiterate support for South-South cooperation. In part, this is attributed to the “growing gap between the scale of climate finance needs”, identifying the problem of how advanced economies intend to deliver the resources that they had “committed to provide.”


G7, G20 and BRICS finance ministers’ meetings (11-12 October)

The G7 group is the old grouping of the largest economies in the world, which includes the US, Canada, European countries and Japan. The G20 is a grouping of some of the largest countries in the world. Since 2009 it has met more frequently. The BRICS (Brazil, Russia, India, China, and South Africa) is a newly formalised grouping of emerging markets. In Tokyo, the G7 met on on Thursday, while the BRICS and G20 groups met on Friday. Each of these meetings was informal and thus no communiqué was issued. It is not yet clear what topics were discussed or what conclusions made.


IMFC communiqué (13 October)

The IMFC is the direction-setting body of finance ministers for the IMF. The communiqué of the IMFC sets out the consensus position about the direction of the Fund and reform. In many ways, the tone of this years’ IMFC communiqué reflects the changing dynamics of influence at the top of the Fund, and its preoccupation with the risks from advanced economies, in particular the euro zone. It highlights advanced economies’ need to “act decisively” and “deliver the necessary structural reforms” while advising emerging market economies to “preserve or use policy flexibility as appropriate to facilitate a response to adverse shocks and support growth.” Governance reforms, stalled due to the United States’ Congress continuing failure to ratify the 2010 agreements, are mentioned in a plaintive “call on members who have yet to complete the necessary steps to do so.”

This theme of increasing willingness to address advanced economies is shown by the statements’ assertion that in the euro zone “further steps are necessary.” The bulk of the discussion of advanced economies is devoted to the euro zone crisis. The statement endorses recent policies as “significant progress.” Despite this, more space is devoted to stating what is still needed, namely banking and fiscal union, as well as structural reforms to boost growth and employment. It does highlight the United States’ need to address the fiscal cliff by “raising the debt ceiling” and the “essential” need to ensure fiscal sustainability.

Where emerging markets and developing countries may be most disappointed with the statement is by what is not mentioned in the discussion of governance reforms. Though it calls on “members who have yet to complete the necessary steps to do so” so that its “considerable progress” in ratifying the 2010 quota and governance reforms can be completed, what is unsaid is that it is only one state whose ratification is required, the United States. This requires Congressional approval and as such is impossible to achieve immediately. What is also missing in its discussion of the quota formula review is any mention of the ostensible aims of those 2010 reform agreements, to provide increased voice and representation for developing countries. Instead, the statement reasserts the commitment to conclude the fifteenth general review fo quotas by January 2014, and the prior completion of the quota formula review by next January.

Unlike the strong terms reserved for the euro zone and United States’ need for action, emerging market countries’ “slowing activity” is argued to be partially externally driven, reflecting “falling prices for non-food commodities and upward pressures on some food items”, also “weaker external and domestic demand”. Given the controversy over this week’s launch of the 2012 World Economic Outlook, which sought to explain why the impact of austerity and fiscal consolidation had been so much worse than expected, it is interesting to note the advice in the communiqué that these economies “will need to ensure flexibility in policy implementation to support growth.”

What is absent from the communiqué is any discussion of the announcement of the Fund’s final official position on capital account management and controls. The so-called Institutional View was expected this October. The divergent views of IMFC members means that the evolution of the Fund’s historic support for liberalization into a more complex view that accepts the usage of capital controls has been vigorously contested and a source of much controversy. Indeed, in his statement to the IMFC Brazil’s Minister of Finance, Guido Montega, asserted that “Brazil, for one, will take whatever measures it deems necessary.” He added that “we cannot accept the attempt to unfairly label as “protectionist” legitimate measures of defense in the areas of foreign trade, exchange rate and capital account management. Experience has shown that the free flow of capital is not necessarily the preferable option in all circumstances. We reaffirm the need for a more balanced approach within the IMF on how to limit excessive short-term capital flows.”


Development Committee communiqué (13 October)

The Development Committee is a joint committee of the boards of the International Monetary Fund (IMF) and the World Bank (Bank), which is meant to advise the Bank and the IMF on critical development issues and the resources needed to promote economic development. The Development Committee communiqué is supposed to set the direction for the Bank in the coming 6 months, but 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 was a statement in support of the World Development Report on jobs which urged the Bank to “continue to help countries strengthen the enabling environment for job creation”. However the communiqué failed to make any reference to any change in Bank practice. For the last 2 years there has been a strong effort at creating ‘implementation plans’ to take the conclusions from WDRs and apply them to Bank practice, but this year’s “policy directions plan” contains few new ideas or plans for how the Bank will adjust its lending or technical assistance work in response to the conclusions.

The committee also referenced gender equality in the statement and “welcome[d] progress made by the WBG in implementing its gender equality agenda” but admitted that “much remains to be done”. The update on progress on the implementation plan on gender was a background document for the meeting. While there was little content on the topic, the very fact that the committee asked for the Bank “to report on further progress in one year” indicates that the dissatisfaction was high enough to demand further monitoring and action.

The Committee, unsurprisingly, referenced to president Jim Kim’s new agenda, laid out at a speech the plenary meeting the day before. His four point agenda elicited “support [for] his vision of a WBG that focusses on impact, provides evidence-based assistance with integrated development solutions to its member countries, and promotes global public goods.” However the “solutions bank” that is at the core of Kim’s message may not find much favour in the long run even if there is welcome from governments of a more results-oriented approach. The Development Committee also endorsed the Bank to “provide support to countries that want to use natural capital accounting”. That is an important follow-up to the Rio+20 summit from earlier in the year, and is a worrying development from the point of view of critics who oppose the programme because it may lead to a commodification of nature. The statement seems to give the go-ahead for the Bank to even go beyond technical assistance and analytical work but to lend money to countries to help them implement these ideas.

Finally there were a few things hot on the political agenda of external actors but absent from the official discussions, most notably safeguards and land grabs. Often there are statements in support of upcoing review efforts, but the safeguards review effort, launched this week in Tokyo got no reference at all. And likewise the big campaign launched by some NGOs on land grabs, which is asking for a moratorium of new land investment from the Bank for 6 months, failed to make any impression on the communiqueé. Likewise the G24 call for more infrastructure financing , which is an implicit call for the Bank to lend more money, also remained unreferenced, with only passing mention of infrastructure as one way to reduce vulnerability from food price volatility. The references to food secutiry and fragile states, both simply urged the Bank to do more work in this area.