- Pre-meetings background
- Agendas and background for papers for committee meetings – IMFC and Development Committee
- Development Committee – World Bank and IMF
- International Monetary and Financial Committee (IMFC) – IMF only
- Highlights of official meetings and communiqués
- Highlights of civil society meetings, and other meetings and seminars
- Conclusions and wrap-up
1. Pre-meetings background
The 2014 annual meetings of the World Bank and IMF will take place from 10 to 12 October in Washington, DC. The civil society programme will take place from 6 to 11 October. You will be able to 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: The first annual meetings following the World Bank’s and IMF’s 70th anniversary herald a continued evolution in the role of these two ageing institutions. However, this is hardly without its problems. Recent reports reveal yet more discontent amongst Bank staff with president Kim’s management and implementation of his strategy and structural changes. The Bank has also been accused by civil society of leading a ‘race to the bottom’, where after two years consultation the environmental and social safeguard policies are getting weaker rather than stronger.
The Fund, perhaps benefitting from less scrutiny than its sister organisation, continues to try to square the circle by advocating rigorous reforms to borrower countries and through its surveillance. Simultaneously it uses these multilateral summits to advocate that countries address the “faltering global economic growth”. The failure to forecast these problems amidst an altogether more optimistic outlook six months ago will most likely be politely ignored.
On the World Bank’s agenda is an update on progress towards achieving the Bank strategy’s twin goals on ending extreme poverty and promoting shared prosperity. However, any progress made is likely to be drowned out by increased internal discontent with the restructuring and cost cutting process emerging from the strategy. Three months into the implementation of the reforms and just a week before the start of the annual meetings news about a big bonus received by the chief financial officer in charge of the cost cutting exercise hit the headlines, followed by rumours of a proposed internal action at the Bank in protest of the restructuring process.
Continued concerns over the World Bank’s safeguards review are likely to dominate civil society activity. A first draft framework released end July has led to accusations of dilution of the safeguards, including of indigenous peoples rights. Many groups have stepped up their activities to show their discontent, including the launch of a dedicated website and a major protest planned during the meetings. Moreover, civil society organisations have raised concerns about the ‘teeth’ of its accountability mechanism, the Inspection Panel, which has been criticised over a new pilot approach on cases.
The Bank’s focus on big infrastructure also continues to receive increased attention with a new G20-linked initiative, the Global Infrastructure Facility, expected to be formally launched during the meetings as a World Bank-housed partnership programme. With little public information available civil society has raised concerns about possible social and environmental impacts. Its focus on scaling up public-private partnerships (PPPs) has also been challenged, including through an evaluation by the Bank’s Independent Evaluation Group, which revealed a lack of proven poverty impacts.
Prior to the annual meetings the International Finance Corporation (IFC, the Bank’s private sector arm) made a case for expanding activities in fragile and conflict affected states, which it claims constitute areas of chronic poverty, and stressed that lessons have been learned from its experience with problem projects, such as Honduran palm oil corporation Dinant. However, with two new Dinant cases logged with the IFC’s accountability mechanism, the Compliance Advisor Ombudsman, civil society is likely to confront the IFC with persistent concerns about human rights violations associated with its clients. This is linked to questions regarding the extent to which the IFC has taken steps to address what civil society organisations (CSOs) insist are structural problems with the IFC. The prevalence of IFC investments through financial intermediaries, given their questionable development impact and investment choices, are also probable areas of discussion between the IFC and CSOs.
The IMF will be looking to reiterate its concerns over the global economy. Two chapters of its forthcoming World Economic Outlook, released days before the annual meetings, advocate caution to the world’s major economies and in line with World Bank and recent G20 strategy, come out in favour of renewed public investment in infrastructure as a strategy to sustain faltering global economic growth. The IMF is arguing that “many advanced economies are stuck in a low growth and high unemployment environment, and borrowing costs are low. Increased public infrastructure investment is one of the few remaining policy levers to support growth. In many emerging market and developing economies, infrastructure bottlenecks are putting a brake on how quickly these economies can grow.” These warnings come as the IMF is expanding its role in countries such as Ghana which can hardly be blamed for the struggles of the global economy, but are suffering as a result.
What may not get much more than cursory attention, despite its significance, is the ongoing impasse over IMF governance reform. Reforms agreed in 2010 to improve developing countries’ and emerging economies’ representation still languish due to the US Congress refusing to ratify these longstanding commitments. Given the US’ effective veto, not only are those reforms blocked but the subsequent negotiations have also stalled. The G20’s recent statement reveals the lack of progress, but given that the IMF has set itself a January deadline to break the deadlock, any indication of developing country frustration is directly linked to the justifications provided for the new BRICS bank and other World Bank alternatives, and may be very significant indeed.
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 2014 International Monetary and Financial Committee meeting, scheduled for Friday 10 and Saturday 11 October, is now available.
The background papers are also available:
Agenda and background papers: Development Committee
The agenda for the Autumn 2014 Development Committee meeting, scheduled for Saturday 11 October, is now available. The background papers will also be published here.
The background papers include the following:
- Provisional agenda
- Update on the Implementation of the Gender Equality Agenda at the World Bank Group
- Promoting Shared Prosperity in an Unequal World: Key Challenges and the Role of the World Bank Group
- Macroeconomic developments in low-income developing countries: 2014 report
- Global Monitoring Report 2014/2015: Ending poverty and sharing prosperity – overview
- G-24 communiqué
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.
09 October: G24 communiqué
The G24 communiqué has focused on the downside of the global economic situation that the IMF and World Bank have highlighted for developing countries, and sets out these states’ concerns on a number of fundamental questions that annual meetings raised. The emphasis on the concerns from risks to global growth are distinctive, arguing that the failure of global growth to “materialise” does require structural reforms but also “more supportive fiscal policy”, with no mention of “consolidation”. The risks to developing countries from richer states policies, including via disruptive capital flows and a “sharp correction from financial markets” require a different approach. Where the G24 agrees with the Bank and Fund is in highlighting the need for infrastructure investment, a subject addressed by every multilateral forum from the BRICS (Brazil, Russia, India, China and South Africa) summits to the G20.
The G24’s take on structural reforms includes highlighting the UN general assembly’s recent resolution in favour of developing a multilateral framework for sovereign debt resolution, as well as re-emphasising that the IMF and World Bank support (which could be read as a warning not to obstruct) achievement of the new Sustainable Development Goals and a satisfactory agreement at the financing for development Conference.
09 October: G20 finance ministers communiqué
11 October: IMFC communiqué
The IMFC communiqué reflects the same concerns which animated the 2014 spring meetings, and indeed every annual and spring meetings since at least 2012 – how to manage low growth, poor job creation while increasing debt and instability – denies policy makers room for maneuver. While the communiqué is perhaps the most forthright yet in calling for bold measures and prioritising job creation, the familiar refrain of ‘appropriate measures’ and ‘medium term’ consolidation suggests the underlying tensions between states keen to support their economy versus those fearing a return to crisis is as real as ever. This may get worse next time these ministers gather, as the ticking time-bomb of governance reform (still stalled at US Congress) can only threaten the ability of the IMFs members to cooperate effectively on the range of problems they identify.
11 October: Development Committee communiqué
In an environment of increasing caution about the global economic climate, the Development Committee’s communiqué does not depart from the World Bank’s established development model, which focuses on ‘bold measures’ by the public sector to create an enabling environment for the private sector. The communiqué, in line with attention given to the topic during the meetings, does focus its attention on the potential role of private infrastructure investment as a driver of growth and antidote to the persistent economic malaise and potential threats. In light of increasing competition, the communiqué applauds efforts made by the Bank to increase its flexibility and speed of its responses.
4. Highlights of civil society meetings and other seminars
Below we will post notes and minutes of sessions attended by the Bretton Woods Project:
- Governance and Impact report 2014
- Making PPPs work
- Emerging markets in transition: growth prospects and challenges
- Comparative analysis of social and environmental safeguards in IFIs
- Financing for development: What actions are needed on debt and illicit capital flows
- IFC lending through financial intermediaries
- After SCOTUS: Next Steps in Sovereign Debt Restructuring
- Matching money and expertise: ensuring conflict sensitivity is top of the agenda for the bank’s fragile state financing
- Responding to people’s grievances by piloting an early solutions approach: Nigeria Lagos case
- Discussion with the IFC/MIGA Compliance Advisor Ombudsman (CAO)
- IFC Update on Dinant financing
- From interim strategy to full country partnership: lessons from Myanmar
- The impact of the BRICS’ Contingent Reserve Arrangement (CRA) and the New Development Bank (NDB)
- Sovereign debt restructuring: options, obstacles and opportunities
5. Conclusions and wrap-up
The World Bank and IMF annual meetings took place within the context of what both institutions termed a more cautious economic outlook and in the shadow of the July establishment of the BRICS’ (Brazil, Russia, India, China and South Africa) New Development Bank (NDB) and Contingent Reserve Arrangement (CRA). While the IMF grapples with a “new mediocre” of global economic challenges, concerns multiplied about the World Bank’s seemingly never-ending restructure.
In an environment of slower than predicted economic growth and fiscal constraints, the annual meeting sessions and resulting communiqués gave particular prominence to the role of infrastructure finance as a potential antidote to the persistent economic malaise. The IMF appears to be in two minds as to whether to highlight its evolving positions on prioritising growth and jobs, which have been widely welcomed though not exactly followed through upon by the Fund, or to sound the alarm over rising debt levels, sluggish growth and risks of ‘profligacy’ (often code to justify more cuts, which have not exactly worked in the last four years). The solution the Fund and Bank have agreed upon is promoting investment with private actors and public backing, especially in infrastructure. The idea being that the short-term benefit of stimulus will pay for itself, and the long-term benefit will alleviate poverty and the infrastructure gap in poorer countries. However, the risks to the global economy seem only to be growing.
The focus on the well-documented global infrastructure deficit and establishment of the Global Infrastructure Facility (GIF) seems to set the stage for renewed interest in public-private partnerships as a driver of large-scale infrastructure projects, as reflected in the World Bank Strategy. The IMF Committee communiqué echoed these priorities, though the IMF itself has historically been rather sceptical of these approaches due to their frequent failure, leading to greater public debt and less successful infrastructure development.
Civil society expressed concerns before and during the annual meetings about the historical failure of large scale infrastructure projects to deliver on their proposed developmental outcome and poor social and environmental record. Concerns remain about the World Bank’s weak commitment to consultation and the adequacy of the mechanisms it uses to that end. The potential negative impact on indigenous populations and the environment of a return to mega infrastructure projects were consistent themes in civil society organisation (CSO) discussions with Bank staff and management. The adequacy of this approach was also questioned, in the light of the growing threat posed by rising indebtedness and sluggish growth in major global economies.
In relation to the Bank’s focus on private sector led growth and its strategy to support capital markets in developing countries, CSOs repeatedly expressed concerns about the growing prominence of the International Finance Corporation (IFC, the Bank’s private sector arm) within the WBG. This included continued concern about the IFC’s use of financial intermediaries (FIs), particularly in fragile and conflict-affected states. Concerns about the lack of demonstrable development impact of IFC investments and the potential for future ‘problem projects’, such as the Honduran palm oil company Dinant, were raised by some executive directors during discussions with CSOs.
Although the Dutch executive director mentioned during the CSO roundtable discussion, that the World Bank continues to emphasise that “there is no competition in poverty alleviation”, many CSOs present at the meetings suspect that the pressure of a changing geopolitical environment and increasing competition has, at least in part, driven the Bank’s approach to its proposed new social and environmental safeguards, which devolves substantial authority and responsibility to borrowers in the name of increased flexibility and more rapid disbursement. Participants in the safeguards consultation made their dissatisfaction plain by walking out of the event and joining an ongoing protest outside the Bank against the dilution of safeguards. The Bank’s new flexible approach, considered a dilution of the existing safeguards by many CSOs, has taken place in parallel to the BRICS bank stated commitment to avoid policy conditionality in its lending. The changes within the Bank, including its ongoing restructuring, must be seen in the context of the rise of more flexible competitors able to disburse loans quickly and with few strings attached.
In relation the evolving competitive pressures, the Dutch Executive Director noted at the CSO roundtable discussion that the Bank will be “very happy to share its expertise and best practices” with the NDB. The Bank continues its efforts to strengthen its role as the knowledge and solutions Bank, which makes the tensions within the Bank that result from the ongoing re-structure particularly relevant.
The town hall meeting between World Bank president Jim Kim and staff was broadcast to a large number of participants outside the hall and thus generated much discussion. While there is little doubt that the World Bank management’s airing of its dirty laundry during the annual meetings owes less to its commitment to transparency than to the rumoured threat of a work stoppage, it was nonetheless enlightening. Kim was told by a staff member that he seems surrounded by senior staff that are unwilling to challenge him and provide honest council. Others spoke openly of a of a culture of retaliation by senior management, in which criticism and disagreements are not tolerated.
Going forward, Kim’s ability to manage the fallout of his controversial restructure and satisfy CSO demands on the safeguards review will be critical to his ability to effect policy change and deliver on his vision. While at the IMF, although Lagarde has again advocated better cooperation, the next test for countries’ ability to work together – securing overdue IMF quota and governance reforms – suggests that these warnings are still being ignored.