IFI governance


World Bank-IMF annual meetings 2013

14 October 2013

  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 2013 annual meetings of the World Bank and IMF will take place from 7 to 13 October in Washington, DC. 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.

Quick summary: This marks the second set of annual meetings for World Bank president Jim Yong Kim, and his new World Bank Group strategy will be centre-stage for the week. With the sovereign debt crisis in the eurozone in a quiet period, the IMF will probably be taking a backstage role to the Bank’s new strategy. The IMF’s focus should be on the balance between austerity and growth policy, the eurozone and emerging market currencies, but the Fund will be distracted by US legislative showdowns which are not only holding up IMF governance reform but also risking US debt default and thus perhaps more financial crises. The US  shutdown may mean media attention avoids the IFIs altogether to cover dysfunctional US politics.

At the World Bank, the official agenda will focus on the World Bank Group strategy as Kim is launching the Bank’s first major restructuring in 15 years. The strategic review of the Bank is affecting everything from corporate goals (agreed at the last annual meetings to be reducing poverty and promoting ‘shared prosperity’) to collaboration across the Bank’s different arms, to internal structures and ultimately staffing and the budget of the organisation. This strategy has been criticised on a number of bases, particularly over how it seems to focus so much attention on “transformational” projects, often interpreted as large infrastructure, and on leveraging resources from the private sector. While Bank president Kim continues to talk about climate change, the Bank’s energy sector policies don’t figure on the agenda, despite a push for gas and for risky large hydropower projects, such as a proposed IFC project in Chile.

The official Development Committee agenda will also include a background paper updating on the progress in implementing the Bank’s gender plan – which was supposed to bring “gender equity” into all the Bank’s work. On the sidelines of the official meetings two further important events are happening: the third round of negotiations on the 17th replenishment of the International Development Association (IDA), and a summit of Brazil, Russia, India, China, and South Africa (BRICS) finance ministers. This year’s World Development Report on risk seems to not be turning many heads or presaging big changes in the way the Bank works. It will be launched on 7 October.

On the IMF side, last spring’s debate over whether the right balance has been struck between austerity policy and growth will rumble on. This is largely focussed on the eurozone, where austerity policy has been under increasing pressure from critics and campaigners, especially over its impact on inequality, not least of which are in Greece. The IMF and its Troika partners had hoped to soon announce Ireland and Portugal ‘successfully’ completed their lending programmes, but it now turns out they still confront major problems which promise further controversy, including the provision of further guarantees or credit lines from Troika, and more pertinently, who should provide them. Statements at the meetings will be carefully inspected for indications of whether the Troika marriage will continue. However the broader austerity debate is lacking, as this form of structural adjustment is hitting much deeper beyond Europe.

The US government shutdown and pending negotiations over the US debt ceiling limit, provide a chance for the IMF to distract itself from its problems in Europe. The IMF tries to appear the sober teacher to the squabbling student role taken on by American politicians. One casualty of the US legislative impasse on a budget has been the IMF’s  governance reforms, which were supposed to be agreed a year ago. The US is the only vote now pending, leaving BRICS countries, due to benefit from the voting realignment, angry about the failure of the IMF to reform. This is contributing their continued momentum in setting up parallel BRICS institutions, with the BRICS Bank capital structure announced in September.

The September turmoil in terms of middle-income country currency volatility should have been the big headline, as it again showed the vulnerability faced by people in these countries to the forces of unregulated global capital flows. The IMF missed the coming storm, quickly downgrading its forecasts that had previously said the BRICS countries would drive global growth, despite warnings about imbalances from many analysts.  It will be interesting to see if the IMF acknowledges the turmoil to caution against too much optimism in Europe or elsewhere. However, that tempest subsided without the IMF returning to rethink the role of financial liberalisation, capital flows and the international monetary system in driving financial crisis risk.

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 2013 International Monetary and Financial Committee meeting, scheduled for Friday 11 October and Saturday 12 October, is now available on the IMF’s website. The agenda items are:

  • Global economic and financial prospects and policies
  • Early warning exercise
  • Dialogue on policy challenges
  • Global policy agenda: taking stock of implementation and the way forward
    • Taking stock of implementation of policy priorities
    • Tuning the engines of growth: policies to achieve stronger growth with financial stability
    • Policy coherence in an interconnected world and the role and governance of the Fund

Agenda and background papers: Development Committee

The agenda for the autumn 2013 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

10 October: G24 communiqué (deeper analysisoriginal document)
Summary: The G24 grouping of developing countries at the IMF and World Bank has the first ministerial meeting. This year’s G24 communiqué breaks no new ground nor calls for anything additional beyond previous meetings’ efforts. It “deeply regret[s]” the failure for IMF governance reforms to be implemented on time, and called on rich countries to “be mindful of negative spillovers and to clearly communicate their exit strategies” from quantitative easing policies. They “support[ed] the WBG corporate strategy” and insisted on “the particular importance of mobilizing large-scale infrastructure financing.” It also calls for “the IMF and the World Bank to demonstrate flexibility in the design and conditionality of their programs in Arab countries in transition“.

11 October: G20 finance ministers meetings (deeper analysis, original document)
Summary: Very few surprises emerged from the G20 communiqué, as the ongoing political instability in the US no doubt inhibited any prospect of significant announcements. The risks to the global economy from the US situation, with particular emphasis on the volatility developing and emerging countries face from changes to US monetary policy, are therefore placed at the heart of the statement. Regarding ongoing G20 commitments, these are all reiterated; from the implementation of the tax agenda agreed earlier this year, the urgent need to ratify IMF Quota and Governance Reform (long blocked by Congress, and now perhaps even further from realization), to the enthusiasm of especially developing countries for ever-greater efforts on how to stimulate private sector investment flows. This latter is especially true of the G20’s endorsement of the World Bank Group’s efforts to mobilise private financing for infrastructure investment.

12 October: IMFC communiqué (deeper analysisoriginal document)
Summary: The IMFC is the direction setting body for the IMF. The communiqué of the IMFC contains no shocks, and a lot of reiteration – hardly a surprise given the major economic concern occupying most minds is the resolution of the deadlock in Washington D.C. Failure to do so really would be a game changer so all eyes are elsewhere, and it shows. Nevertheless the IMFC remain resolutely optimistic for each and every region, noting the strong performance of LICs, continued contribution of emerging markets to global growth and emphasizing tentative signs of recovery in advanced economies, particularly Europe. They do note a series of risks, of the US government’s deadlock of course, but the emphasis is clearly on what countries can do to safeguard growth. This is the culmination of the shift evident in last year’s October statement and at the Spring meetings earlier this year, where the pro-austerity countries’ message of fiscal consolidation was relegated to second billing in favour of the need to protect economic growth and jobs. A subtle warning of stormy times ahead is detectable though, as the committee reiterated that the Fund is “prepared to offer financing to support appropriate adjustments and reforms”. The global economy’s not out of the woods yet.

12 October: Development Committee communiqué (deeper analysisoriginal document)
Summary: The Development Committee is the direction setting body for the World Bank. The Development Committee endorsed the new World Bank strategy, including welcoming the move to bring the different Bank arms together in a “One World Bank Group”, working with both the public and private sector, but made no links to civil society priorities, such as the safeguards review. It reiterated its call for a robust IDA replenishment  and welcomed the Bank’s focus on fragile states and progress to date on gender equality. It also welcomed the Bank’s push for infrastructure and regional transformational projects.

Please see our in-depth analysis of all the communiques with more information on the background to these positions and why they are important.

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:

08 October

09 October

10 October

11 October

12 October

5. Conclusions and wrap-up

The 2013 World Bank/IMF annual meetings concluded on 13 October. This year’s annual meetings were overshadowed by dysfunction in US governance. The US government shutdown, caused by partisan bickering over the US federal budget, meant most of the juicy stories for journalists were on Capitol Hill. With an impending debt default by the US – not because of any real insolvency but because of an arbitrary legislative limit on the US debt which will kick in on 17 October – the IMF managing director Christine Lagarde spent much of the meetings last week telling the US to get its house in order to prevent massive negative impacts on the rest of the world. Even World Bank president Jim Yong Kim got involved in what would normally be IMF terrain, making public statements about how developing countries would be hurt if the US did not act. Alas this French-American double act probably had little impact on the US Congress, as Washington’s domestic politics is notoriously uninterested in international opinion.

Kim walked away from the week with a mandate for World Bank reform, as expected. There was no chance of a rejection of his strategy, but the Development Committee’s use of “strongly endorse” will help Kim push through the internal obstacles to come for the biggest reorganisation of the Bank in about two decades. Despite gloomy rumblings from Bank staff, they are nothing like the dark days of then-president Paul Wolfowitz when the staff association and some senior management were in open revolt. The next six months will see the heavy hand of restructuring descend with many staff jobs at risk, but the Development Committee which guides the Bank has given Kim  and the rest of Bank senior management a strong mandate to do pretty much as they please. Kim seems determined to avoid what he has called “grand discourses” and focus instead on a technocratic agenda, on “being practical”. The week of the meetings he set the Bank’s interim poverty target at bringing the number of people in “absolute poverty” down to 9 per cent by 2020. This sort of technocratic agenda has led to much of the criticism of the strategy, in that it ignores the politics of what has led to development failures or driven conflict. Other than its endorsement of the strategy, however, the Development Committee had little to add or direct for the Bank.

One of the more unusual moments of the meetings was a show of leadership bonhomie on the subject of climate change right at the start of the week, with Kim and Lagarde sharing a stage to drive home the message about the “economic case for climate action“. They agreed a “wonderful division of labour” with the IMF taking on fossil fuel subsidies and pricing of carbon, while the Bank takes on “sustainable energy for all”, building low-carbon cities, and “climate-smart” agriculture. Little recognition was given to the Bank’s historical role in subsidising fossil fuels, including through continued investment in private sector exploration for new fossil fuel fields. Nor was there much acceptance of the criticisms of carbon markets, which brought their plan of action in for critique. Otherwise the green agenda was fairly silent during the week, a reminder of the original third Bank goal on sustainability that was scrapped earlier in the year. Instead the continued push for an increased and integrated role for IFC and MIGA raised concerns, including the use of largely unaccountable financial intermediaries and that the IFC model of environmental and social safeguards will apply to the whole World Bank Group.

For the IMF, getting its forecasts dramatically wrong again is getting a bit embarrassing. The IMF abandoned its “three-speed” recovery thesis of the spring, but media’s inevitable focus on the dramatic US government dysfunction meant they ignored just how much the Fund miscalculated. Economic growth projection downgrades were posted for the US as well as all the BRICS (Brazil, Russia, India, China and South Africa) plus Mexico and Thailand. Upgrades were rare but spelled out for perennial bête noire Venezuela, Argentina and Hungary, as well as oil- and gas-export-fuelled Turkmenistan, Turkey and Philippines. But the meetings left the distinct impression that the IMF is asking whether recovery is really underway at all. The IMF’s statements on growth prospects were so full of caveats, and there were so many expressions of concern about risk, that the Fund seems to be hedging all bets. Perhaps this time they are trying to future-proof their reputation after so catastrophically failing to see the 2008 financial crisis coming and then in the last 18 months so consistently getting the recovery picture wrong.

Interestingly, the Fund staff and management spent a good part of the week discussing tax. The old joke that the IMF’s name actually stands for “it’s mostly fiscal” usually translates into policy of ‘just cut spending’, but the Fund seems to be taking a more assertive role in tax policy. While it remains careful not to step on the toes of the OECD and its “Global Forum”, which has been tasked by the G20 with the lion’s share of work on tackling tax evasion and avoidance, the Fund burnished its credentials as the multilateral forum for coordination on the spillovers of tax policies with a full day of seminars and meetings on tax systems (video of sessions 1, 2, 3). Not surprisingly, Largarde’s speech on the topic paid little attention to the role the Fund took in the 90s and 2000s setting tax policy in developing countries, including using loan conditionality to unilaterally push down trade tariffs, depriving developing country governments of a key source of revenue. Nor did it analyse the Fund’s decades long infatuation with regressive value-added taxes, which remain a feature of its advice in many countries.

Civil society groups ended the week in continued frustration in getting their points heard. On the official Program of Seminars agenda there were no NGO or trade union representatives discussing policy with the finance ministers, journalists and academics. Even think tank staff had only limited space for putting their points of view across. Big worries still remain in relation to the push for “transformational” projects at the Bank. If that means more mega-dams and water public private partnerships, lots of NGOs will be unhappy. And if it means weakening the safeguards applicability there will be strong resistance. No new announcement was made on the Bank’s planned Global Infrastructure Facility, but civil society is keeping a close eye on developments. While the Bank’s new energy directions paper was off the agenda, an international NGO protest on the weekend demanded the Bank end support to all dirty energy, one of the first such protests in Washington since 2001.  At the same time, some groups are accepting that the World Bank can be a partner, including through things like the Global Program for Social Accountability (GPSA).

All in all the meetings produced little smoke let alone fire. One journalist called them “the dullest ever”. While the civil society space was this time ‘upgraded’ from the usual windowless basement, it was actually unceremoniously dumped in another building altogether, cutting them off from the press centre entirely, and keeping NGOs out of the view of officials altogether. With pre-cooked and sterile official communiqués, a lack of real policy discussion, and overly sanitised panels for public seminars, dullness is not a surprising outcome. In comparison with October’s shenanigans in the US government, the IFIs really do look boring, despite the significance of so much of their work. This relative lack of scrutiny seemed to suit them just fine.