Conditionality

Background

IMF recommendations to Arab countries in transition: Challenges & prospects

12 April 2014

Sponsors: Arab NGO Network for Development (ANND); Bretton Woods Project; Middle East Task Force of the New America Foundation

Panelists: Kinda Mohamadieh (Regional Advisor, Arab NGO Network for Development), Dr. Mohamad Saadi (Professor, Casablanca University), Harald Finger (Deputy Director of Middle East and Central Asia, IMF), CHAIR: Ziad Abdel Samad (Executive Director, Arab NGO Network for Development)

Presentations

Mohamed Saadi

  • History of IMF in Arab region
    • 1980s saw the first deepening of IMF involvement in the region during the debt crises – focussed on macroeconomic indicators, with tight conditionality – but outcomes of programmes were not satisfactory, with impacts on growth/social outcomes
    • We ended up with unemployment, low growth, disparities, inequality; but this also instigated corrupt and crony practices in the economy – this might have been overlooked because of the geopolitical alliances of Arab regimes with Western powers
    • Recent years
      • Favourable global economic environment meant decent growth since 2000, but not trickle-down, and meaning gains were concentrated in the elite
      • IMF response to Arab Spring focussed again on harsh austerity, effecting fiscal policy, wages, subsidy, labour regulation sides
      • But we know these policies are going to create worse unemployment
      • Moroccan situation – $6.2 billion loan
        • Conditions: removal of food/energy subsidies; wage/employment freeze in public sector; labour market flexibility
        • Has the IMF changed policies given inequality paper? No – business as usual; Latest Moroccan programme note stressed continued fiscal consolidation, subsidy reform – including both fuel and food; plus business climate reforms
        • Impacts: Slashing expenditure to social services, price increases; leading to increase in socio-political risks from tensions (ie. Trade union protests) and crime
        • We need to ask what are the alternatives

Harald Finger

  • It is clear now that we didn’t pay enough attention in 2000s to economic inequalities; we are paying more attention to social issues
  • Subsidy reforms are important – we think it is not an end in and of itself, it is a question of fiscal deficit; there is a real underlying problem
    • We don’t recommend big fiscal adjustment in the near term, recent programmes had relatively gradual adjustment (more gradual than EU countries)
    • Subsidies are more than 6% of GDP, larger than spending on education; and this is inefficient because of mis-targetting; food subsidies are less mis-targeted, but it should be targeted eventually in conjunction with appropriate social protection measures
    • Need to free up fiscal resources, we should talk about revenue for example; we do not recommend cuts to investment spending; wage bills have grown a lot, so good idea to keep this steadier
    • In practice – hard to implement subsidy reform well, have to decide country-by-country
      • Need targeted mitigating measures, phasing and sequencing, rules-based pricing mechanism, energy sector reform and fix efficiency of SOEs, needs to be communicated well
      • Social safety nets: there is substantial poverty in the region, existing safety nets are small
        • Need to increase spending and targeting, simply the programmes, delivery infrastructure is important (smart cards, etc)
        • Prioritise things that focus on human capital; proxy means testing, communications

Kinda Mohamadieh, ANND

  • New IMF paper yesterday on the situation in the Arab economies – this is a big improvement on the past document from 2011
    • 2011 paper focussed on same old recommendations, but in a better governance environment – it focussed on liberalisation in many sectors
    • New paper is more cautious, with focus on prioritisation and sequencing, building coalitions for reform; it has good aggregate aims, but the designs to get there are important
    • Trade-related points in the paper: focus on competitiveness, export-led growth
      • Liberalisation was not sequenced appropriately, so it harmed the  countries in the end
      • Shocks from shrinking EU demand is not in the paper; but we should also build domestic markets and consumption
      • Possible to focus on regional integration before moving to liberalisation for outside; particularly the financial sector; this sequencing is very important
      • Good point we need to discuss more – progressivity in tax areas for redestribution

Harald

  • recognise need more on supply side reforms, need to deal with unemployment, esp youth unemployment; need more dynamism and better education
  • trade is an area for catch up, non-tariff barriers in EU block MENA country access to markets; advanced countries have a role to open up for trade
  • Useful to integrate into global value chains – they are not conditionalities, this is medium-term
  • Need gradual liberalisation on trade side, regional integration would be good for FDI as well
  • In ACT, only 7% of companies have access to credit – finance is very concentrated; so need to boost financial inclusion

Discussions

Q: economists agree on the role of the state in the economy, but here and in IMF paper it seems to be a taboo topic; what about sectoral approaches, you ignore agriculture which is where 50% of people are located in rural areas. What about the role of the system, like S Korea or Taiwan?

Q: safety nets are viewed as a tool to release fiscal space, but nets should be counter-cyclical mechanisms in the midst of a fair-growth paradigm; the real story is monopolies in the market; are safety nets the end story for building a fair growth model?

Q: in Jordan, taxation is a problem, with low income taxes but high fuel and VAT taxes; need to take into consideration the political context and the socio-economic impacts

Q: in Yemen – the conditionalities – subsidies removal, tax reform, price liberalisation – but from citizen perspective there is a lack of social protection in place to cover the impact on poor and low-income households; big implications on people involved in agriculture because of transport costs, so disproportionately impacting on the poor; social safety nets for cash transfers of $15/month are inadequate; plus the corruption prevents effective implementation

Mohamad Saadi – in Morocco we have had 30% increase in energy prices since 2012, is this considered gradual? This will have impact on food security. Public sector wage bill freeze will lead to real wage declines, and lower willingness to do work; social services will essentially be withdrawn. There are numerous contradictions in the measures, and safety nets are too small.

Harald

  • Hard to take a firm view on industrial policies, we at IMF look at enabling conditions to get private sector to create growth, next step depends on the circumstances. In ACT private investment is holding back because of the political transitions, we need to see some public sector action to get investment moving and to get demand going
  • Hard to make concrete recommendations, because activist industrial policies have failed miserably elsewhere
  • Sectorally, agricultural sector can be a good investment because of rural incomes and freeing up labour – but generally this is beyond the IMF’s role
  • Safety nets are not intended to be pro-cyclical, they should be targeted and not taken by the rich, they need have automatic stabilisers
  • We are focussing more on fairness of taxation now, but implementation ease is also a concern; we need something more progressive, and something that can be worked on
  • Yes removing subsidies will be painful for the poor, we need to make sure adequate transfer systems in place – it is a big fiscal issue – there will be consequences, and we need to address them with safety nets; corruption is an issue – this is why modern delivery mechanisms are better, and cash can be a better way to avoid corruption than food subsidies

Kinda: trade policy is not in the mandate of IMF either, yet is promotes FTAs, so you could have a view on industrial policy too. The trade policies means you are already in the discussion on industrial policy, because the trade policies will impact on future industrialisation of our economies. Private sector has to work in the context of an environment that the public sector creates.

Ziad – to continue this discussion in the future, we must have more transparency of your negotiations with governments.

More background on this issue

Conditionality

Background

20 April 2017 | Minutes

The IMF and World Bank policies and the Arab world’s transition economies

Notes from the Civil Society Policy Forum Session at the 2017 World Bank and IMF Spring Meetings on IMF and World Bank programmes in the MENA Region.

Conditionality

Background

16 April 2016 | Minutes

IMF and World Bank’s Influence on Economic Policy Making in Developing Countries

Notes from a meeting at the IMF/World Bank CSO Forum at the 2016 Spring meetings, evaluating how well the World Bank and IMF have done on respecting the country ownership principle ten years after its international acceptance.

Conditionality

Background

22 April 2014 | Minutes

Reforming IMF conditionality. Where do we stand?

Conditionality

Background

12 April 2014

IMF recommendations to Arab countries in transition: Challenges & prospects

IFI governance

Background

13 October 2013 | Minutes

Is the European recovery finally under way?

CEPR event at the 2013 civil society forum on whether a recovery is under way in Europe; held as a debate between Prakash Loungani of the IMF's research department and Mark Weisbrot, CEPR co-director.

IFI governance

Background

12 October 2013 | Minutes

Austerity and Inequality in Europe

Minutes from Oxfam-hosted civil society seminar at 2013 Annual meetings on European austerity and inequality

Finance

Background

10 October 2013 | Minutes

Economic impact of IMF programmes in low-income countries: civil society forum

Notes from a civil society forum on economic impact of IMF programmes in low-income countries, 10 October 2013

IFI governance

Background

3 July 2012 | Inside the institutions

Revolving doors: staff turnover between IFIs and African governments

The term 'revolving doors' refers to frequent staff turnover between institutions, usually relevant when these represent different interests working on the same policy issues. This serves to foster cross-institutional networks, practices and alliances. The staff turnover between international financial institutions (IFIs) and borrowing governments works as a mechanism through which specific ideas and practices learnt and promoted in IFIs are translated into policies in borrowing countries

Conditionality

Background

23 April 2012 | Minutes

A Global Shared Societies Agenda

Minutes meeting for A Global Shared Societies Agenda

Finance

Background

20 April 2012 | Minutes

How can the IMF enhance its focus on growth and poverty reduction in LICS?

A civil society meeting held at the World Bank and the IMF hold their 2012 spring meetings in Washington DC on Friday 20th April.

IFI governance

Background

20 April 2012 | Minutes

Seminar - Time for a New Consensus: Regulating Financial Flows for Stability and Development

As the World Bank and the IMF hold their 2012 spring meetings in Washington DC this week, Latindadd and the Bretton Woods Project organised a seminar about regulating financial flows on Thursday 19 April.

IFI governance

Background

20 April 2012 | Minutes

Austerity in the Eurozone

Seminar at the Spring meetings 2012, 19 April 12

IFI governance

Background

19 April 2012 | Minutes

Development Policy Lending (DPL) Retrospective consultation

Minutes meeting, Washington DC, 18 April 2012

IFI governance

Background

18 April 2012 | Minutes

UK civil society meeting UK IMF Executive Director Alex Gibbs

Notes of a meeting with UK executive director to the IMF Alex Gibbs in April 2012

IFI governance

Background

12 October 2011 | Minutes

UK civil society meeting with HM Treasury and UK IMF Executive Director

Notes meeting Alex Gibbs September 2011

IFI governance

Background

13 May 2011 | Minutes

IMF consultation on the 2011 review of conditionality

Minutes from a 4 May 2011 consultation in London between civil society organisations and IMF staff.

IFI governance

Background

18 April 2011 | Minutes

Consultation on Program for Results (P4R)

Notes of meeting, Washington DC, April 16, 2011

Environment

Background

15 April 2011 | Minutes

The Green Climate Fund: discussion of principles and design

Notes of meeting, Washington DC, April 15, 2011

Conditionality

Background

13 April 2011 | Minutes

IMF conditionality review

Note of meeting

Finance

Background

13 April 2011 | Minutes

Meeting between the UK IMF Executive Director Alex Gibbs, HM Treasury and UK civil society organisat

Notes of the seminar of spring meetings 2011

IFI governance

Background

11 October 2010 | Minutes

Global economic governance

Notes of the seminar of annual meetings 2010

Conditionality

Background

8 October 2010 | Minutes

Civil Society Townhall Meeting with Robert Zoellick and Dominique Strauss-Kahn

Notes of the seminar of annual meetings 2010

Knowledge

Background

7 October 2010 | Minutes

Meeting between the UK IMF Executive Director Alex Gibbs , HM Treasury and UK civil society organisa

Notes of the seminar of annual meetings 2010

IFI governance

Background

4 October 2010 | Minutes

Meeting on the World Bank between DFID and UK NGOs

Notes of a meeting between UK civil society and DFID staff.

Conditionality

Background

17 June 2010 | Inside the institutions

The IMF's framework for low-income countries

In the midst of the global financial and economic crisis the IMF amended its lending framework for low-income countries (LICs). It now has three main instruments for LICs – the Extended Credit Facility, the Standby Credit Facility and the Rapid Credit Facility. The three different programmes are subsidised by the newly created Poverty Reduction and Growth Trust (PRGT). The IMF also engages with LICs through non-financial facilities, especially the Policy Support Instrument (PSI) and the St

IFI governance

Background

23 April 2010 | Minutes

An IMF for the 21st century - the low-income country perspective

Civil society event at the World Bank spring meetings 2010, 22 April

IFI governance

Background

6 April 2010 | Minutes

Meeting between UK civil society and Susanna Moorehead, UK Executive Director to the World Bank

Minutes of a meeting between UK civil society, UK World Bank Executive Director Susanna Moorehead, and DFID staff

IFI governance

Background

30 March 2010 | Minutes

Meeting between UK civil society and Alex Gibbs, UK IMF Executive Director

Minutes of a meeting between UK civil society, UK IMF Executive Director Alex Gibbs, and UK Treasury staff

Finance

Background

15 February 2010 | Inside the institutions

IDA replenishment

This year, donor countries will decide on their financial contributions to the World Bank's International Development Association (IDA) for 2011-2014.

Environment

Background

8 October 2009 | Minutes

CSO Townhall meeting

Notes from the CSO townhall meeting with Dominique Strauss-Kahn and Robert Zoellick

Conditionality

Background

5 October 2009 | Minutes

The IMF: Change we can believe in?

The IMF: Change we can believe in? Notes of a civil society meeting in Istanbul. Speakers include Joseph Stiglitz, Andrew Kumbatira, Caroline Atkinson, and Bhumika Muchhala.

IFI governance

Background

4 October 2009 | Minutes

Global economic governance roundtable

Summary of a discussion with German government representatives, Jomo KS of the UN and civil society organisations.

IFI governance

Background

29 September 2009 | Minutes

Videoconference between UK civil society and Alex Gibbs, UK IMF Executive Director

Minutes of a meeting between UK civil society, UK IMF Executive Director Alex Gibbs, and UK Treasury staff

Environment

Background

24 September 2009 | Minutes

Meeting on the World Bank between UK NGOs and Douglas Alexander, Secretary of State for Internationa

Minutes of a meeting between Douglas Alexander, Secretary of State for International Development, and UK NGOs, 16 September 2009

IFI governance

Background

25 April 2009 | Minutes

IMF crisis response- discussion

Notes of a meeting between the IMF and civil society organisations

Conditionality

Background

24 April 2009 | Minutes

Policy Support Instrument (PSI) - seminar

Notes of discussion at World Bank Civil Society Forum, 23 April 2009

IFI governance

Background

23 April 2009 | Minutes

G20 Summit and impacts on developing countries

Summary of IMF and World Bank presentations and the discussion afterwards

IFI governance

Background

23 April 2009 | Minutes

Meeting between UK civil society and Douglas Alexander, Secretary of State for International Develop

Minutes of a meeting between Douglas Alexander, Secretary of State for International Development, and UK NGOs, 21 April 2009

IFI governance

Background

20 April 2009 | Minutes

Meeting between UK NGOs and Susanna Moorehead, UK World Bank Executive Director

Minutes of a meeting between UK civil society and UK World Bank Executive Director Susanna Moorehead

IFI governance

Background

15 April 2009 | Minutes

Meeting between UK civil society and Alex Gibbs, UK IMF Executive Director

Minutes of a meeting between UK civil society, UK IMF Executive Director Alex Gibbs, and UK Treasury staff

Conditionality

Background

10 November 2008 | Minutes

Minutes from Video conference of UK NGOs with UK Executive Director to the IMF

Meeting exploring the IMF

Conditionality

Background

11 October 2008 | Minutes

Combating tax flight: ending evasion and reducing avoidance

Norway, Germany, IMF, WOrld Bank and experts discuss tackling tax evasion and capital flight.

Social services

Background

10 April 2008 | Minutes

Structural conditionalities in the IMF: A discussion between the IMF, IEO, and CSOs

An upcoming civil society report demonstrates that IMF structural conditionality did not decline in the five years after the approval of the Fund's conditionality guidelines in September 2002, which were based on the principles of ownership and criticality in its application of structural conditionality, as well as to streamlining the number of conditions. Going on seven years, it seems that these guidelines have been more honoured in principle than in practice. A recent Independent Evaluation O

Conditionality

Background

26 October 2007 | Minutes

Wage bill ceilings, fiscal and monetary policies and absorbing aid inflows - updates and next steps

Highlights of a 20 October discussion on the the IMF's fiscal and monetary policy advice and conditionality for low-income countries at the World Bank-IMF annual meetings 2007.

Conditionality

Background

26 October 2007 | Minutes

The IMF's Policy Support Instrument: more flexibility or continued belt tightening

Highlights of a 21 October discussion on the IMF's Policy Support Instrument (PSI) at the World Bank-IMF annual meetings 2007.

Environment

Background

5 October 2007 | Minutes

Highlights of BWI-UK network meeting with Douglas Alexander

Highlights of a 4 October meeting between NGOs in the BWI-UK network and secretary of state for international development, Douglas Alexander, addressing IFI strategic reviews, aid effectiveness, clean energy/climate change and a number of other issues.

IFI governance

Background

25 June 2007 | Minutes

Highlights of UK NGO meeting with UK Executive Director to the WB/IMF Tom Scholar

Highlights of a 22 June 2007 meeting between UK NGOs and UK executive director to the World Bank and IMF, Tom Scholar. Issues covered included review of the Bank's transport strategy, avoided deforestation, conditionality, debt, social protection and IFI governance.

IFI governance

Background

9 May 2007 | Minutes

Highlights of BWI-UK / UKAN Workshop: The roles of the IFIs in low-income countries

Highlights/summary of outcomes for the 1 May 2007 BWI-UK / UKAN Workshop: The roles of the IFIs in low-income countries

Conditionality

Background

19 April 2007 | Minutes

Sub-Saharan Africa: Outlook and Challenges

Sub-Saharan Africa: Outlook and Challenges; IMF-civil society dialogue, 13 April 2007

Infrastructure

Background

18 April 2007 | Minutes

Highlights of meeting with Tom Scholar and UK NGOs

Highlights of meeting between Tom Scholar and UK NGOs, April 2007

Environment

Background

16 April 2007 | Minutes

Press briefing with Danny Glover

Minutes of press briefing

Environment

Background

18 December 2006 | Minutes

Highlights of meeting with Tom Scholar and UK NGOs

Highlights of meeting between Tom Scholar and UK NGOs, December 2006

Infrastructure

Background

15 November 2006 | Minutes

Highlights of UK NGO meeting with Paul Wolfowitz

Highlights from a UK NGO meeting held with Paul Wolfowitz, head of the World Bank, in London on 13 November 2006. Issues covered include: the Bank's anti-corruption framework; financing 'fragile' states; conditionality; debt; and the extractive industry, energy infrastructure and climate change

IFI governance

Background

26 October 2006 | Minutes

Highlights of Hilary Benn meeting with UK NGOs

Highlights of semi-annual meeting between UK Secretary of State for International Development and UK NGOs. Topics covered include CSO access to annual meetings, conditionality, anti-corruption, odious debt, clean energy, education in LICUS, bank internal governance, IFC safeguards

IFI governance

Background

26 September 2006 | Minutes

Highlights of Tom Scholar meeting with UK NGOs

Highlights of quarterly meeting between UK executive director to the World Bank and IMF and UK NGOs. Topics covered include CSO access to annual meetings, IMF strategic review, conditionality, anti-corruption and education.

IFI governance

Background

9 May 2006 | Minutes

Policy issues in scaling up of aid flows

Highlights of a spring meetings dialogue hosted by the IMF on scaling-up aid, where senior Fund staff Peter Heller walked out.

IFI governance

Background

8 May 2006 | Minutes

IEO evaluation of the role of the IMF in the determination of the external financing envelope

Uncorrected highlights of a 21 April 2006 workshop hosted by the Independent Evaluation Office on their evaluation of the role of the IMF in the determination of the external financing envelope in sub-Saharan Africa.

Social services

Background

28 April 2006 | Minutes

Evaluating the impact of the PRGF: The cases of Ethiopia, Malawi, Tanzania and Zambia

Highlights of a civil society dialogue on the IMF Poverty Reduction and Growth Facility, at the World Bank spring meetings in Washington, 20 April 2006.

Accountability

Background

28 April 2006 | Minutes

Debt, conditionality and corruption: Civil society strategy session

Highlights of a 20 April civil society strategy session in Washington on debt, conditionality and corruption.

Accountability

Background

25 April 2006 | Minutes

Dialogue on the Doha trade round

Dialogue on the Doha trade round at the World Bank-IMF spring meetings in Washington, 20 April 2006.

Conditionality

Background

25 April 2006 | Minutes

Dialogue on national development strategies and the Millennium Development Goals

Dialogue on national development strategies and the Millennium Development Goals at the World Bank-IMF spring meetings in Washington, 20 April 2006.

Environment

Background

12 January 2006 | Minutes

Highlights of UK NGO meeting with executive director to the World Bank and IMF, Tom Scholar

Brief minutes of UK NGO meeting with Tom Scholar

Environment

Background

28 June 2005 | Minutes

Highlights of meeting between Tom Scholar and UK NGOS

Highlights of meeting between Tom Scholar and UK NGOS

Accountability

Background

28 April 2005 | Minutes

UK NGO meeting with executive director Tom Scholar: uncorrected highlights 4 April 2005

Minutes of Spring meeting with Tom Scholar and UK NGOs in London

Environment

Background

16 December 2004 | Minutes

UK NGO meeting with Executive Director Tom Scholar

Uncorrected highlights of a 14 December meeting between UK NGOs and UK Executive Director to the World Bank and IMF, Tom Scholar.

Environment

Background

8 October 2004 | Minutes

Meeting between UK NGOs and Secretary of State, Hilary Benn

Summary of key points discussed at the meeting on 20 September between Secretary of State Hilary Benn, and UK NGOs

Environment

Background

8 October 2004 | Minutes

Meeting with UK Executive Director to the WB and IMF, Tom Scholar

Meeting with UK Executive Director to the WB and IMF, Tom Scholar, Annual Meetings 2004, 14 September

Knowledge

Background

6 October 2004 | Minutes

The Reality of Aid 2004: Report on Governance and Rights

This year's Reality of Aid report focuses on Governance and Human Rights in International Cooperation. It was produced by a global network of civil society organizations from both the north and south. The report calls for all actors in the global aid regime to entrench the discourse of human rights in international cooperation.

Conditionality

Background

8 May 2002 | Minutes

The Ugandan PRSP Experience

Meeting with Rick Rowden, RESULTS, 31 May 2002

Latest articles on this issue

Artwork by Robin Heighway-Bury

Conditionality

Analysis

The political cost of IMF programmes

As Jordan is engulfed in social unrest and political upheaval, questions are raised around the relationship between IMF conditionality and trends in instability.

27 July 2018
Christine Lagarde

Conditionality

Analysis

The IMF's approach to social protection and the crisis of multilateralism

UN Special Rapporteur publishes report on IMF and social protection, calls on Fund to practice what it preaches.

24 July 2018 | Guest analysis
Argentina President Mauricio Maccri

Conditionality

Analysis

Bad news for Argentina: The cruel IMF is back

As Argentina agrees to a $50 billion IMF loan, the ghost of loans past lingers, as protests erupt and strikes begin.

23 July 2018

Conditionality

Analysis

Pro-poor or anti-poor? The World Bank and IMF’s approach to social protection

Stephen Kidd critiques Bretton Woods Institutions' approach to targeted social protection systems, arguing the poor lose out the most.

28 March 2018 | Briefing

Conditionality

Commentary

Tunisians take to the streets over IMF-imposed austerity

Despite claiming to no longer support austerity, the IMF has imposed damaging cutbacks on the people of Tunisia as part of its loan conditionality, leading to widespread discontent on Tunisian streets.

25 March 2018 | Briefing

Rights

Analysis

Civil society still waiting for ‘IMF Spring’ to blossom

Civil society was out in full force during annual meetings challenging the IMF’s claims that it is reducing economic and gender inequality.

7 December 2017

Conditionality

News

New IMF conditionality database launched

Team of UK academics launch new, freely available IMF conditionality database.

7 December 2017

Conditionality

News

Suriname walks away from IMF conditionalities

The government of Suriname has cancelled its loan programme with the IMF, claiming its conditionalities were too much to bear for its citizens.

3 July 2017

Conditionality

News

IMF Ukraine programme’s impact on women’s rights criticised at Human Rights Council

WILPF submitted a statement to Human Rights Council criticising the IMF's Ukraine programme. The statement argued that the programme's harsh conditionalities hurt women in particular and called for a human rights based approach to macroeconomic policy making.

3 July 2017

Conditionality

Analysis

The truth behind IMF’s claims to promote social protection in low-income countries

Newly published self-congratulatory IMF policy paper on impacts of loan programmes on social protection is self-referential and ignores available evidence.

16 June 2017 | Guest analysis