- 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
As the World Bank and IMF prepare to meet in Lima, Peru, we set out the key issues on the table during the week.
As the annual meetings return to Latin America, civil society stands prepared with an alternative forum. While the UN’s new Sustainable Development Goals are set to dominate the official agenda, a looming debt crisis and the failure to move forward on governance issues at both the Bank and the Fund are likely to cause tensions behind the scenes. Meanwhile controversy remains over the Bank’s safeguards review, its track record in supporting fossil fuels and its unflinching reliance on the private sector to deliver development outcomes.
This year the annual meetings return to Latin America for the first time in nearly 50 years, with Peru as host. It will also see more active CSO engagement than seen in the past few years, with local CSOs hosting an Alternative Platform. The meetings will be held in the aftermath of the recent UN summit to adopt the Sustainable Development Goals (SDGs), thus dominating the official agenda. A joint statement from leaders of all the world’s multi-lateral development banks, plus the Fund, in the wake of the summit showed some heart-warming rhetoric. Fund managing director Christine Lagarde said: “We all have a responsibility to achieve these goals, at the country level and through our collective action at the global level.”
At the top of the agenda for discussion at the Development Committee meeting is a paper outlining the Bank’s self-proclaimed leadership role in implementing the SDGs. Despite decades of civil society complaints about Bank projects, the Bank argues that its “core strengths and track record” makes it “fit-for-purpose” for supporting the 2030 agenda, offering “the full package” needed. Apart from what it calls its “core comparative advantage supporting the SDGs at the country level”, it argues itself “well placed to engage on some critical challenges”, including “meeting infrastructure needs for growth and service delivery” and “combating climate change”. However, no big commitments without an associated funding drive. Despite highlighting its “long-standing experience in financing, investing with, and mobilising private partners” and ability to “leverage, and … maximising the impact of every dollar”, it calls itself “stretched to capacity”. Proposed options for addressing this gap include increased loans from the Bank’s low-income country arm, the International Development Association (IDA) and what seems to be a direct request to be able to benefit from climate finance flows.
As we pointed out in our analysis of the spring meetings, specifically the communique of the IMF Committee (IMFC) overseeing the Fund’s work, the IMF is evolving toward an expanded role. The latest IMF paper for the Development Committee reveals how this process continues, with roles set out for the IMF to implement in order to achieve the SDGs. The initiatives, reassuringly but also revealingly described as “staying within the IMF’s mandate”, point to five areas of SDG implementation to be led by the Fund. These entail helping developing countries plug revenue gaps by improving “revenue generating capacity” (which should lead to interesting differences of opinion with the OECD regarding how to reform the global tax system and reduce tax avoidance and evasion), and helping them to address “infrastructure gaps” via policy advice. The Fund will also monitor more closely crisis risks as countries’ financial systems are increasingly integrated, perhaps the most ‘traditional’ of its SDG-implementation functions. Less obvious, the IMF sees itself driving forward work to develop greater focus on inclusion and environmental sustainability – most likely meaning its work on inequality and energy subsidy reforms. On the former, the ITUC reveals how little of the Fund’s inequality rhetoric is achieved in practice, and on the latter, Hassan Sherry of the Arab NGO Network for Development showed how problematic the IMF’s favoured ‘solutions’ can be in our winter 2015 Observer.
Yet how much leadership on these issues can the Fund and Bank be expected to show, given a governance context that can only be described as a predictable but slowly-unfolding car crash. As our latest Observer shows, the IMF’s five-year overdue voice and financing reform to its quota system is as unlikely to be resolved as ever. Add to this the World Bank’s shareholding review. The Bank’s Development Committee paper on the SDGs acknowledges that the Bank’s “global legitimacy” must be secured through the right distribution of shareholding, however, in the Bank’s report to their Governors on the review it is described as occurring within a “complex” context. You could say that again. The failure of even these superficial reforms, let alone changes that would truly represent the original 2008 Voice reforms’ three objectives of 1) voice as shareholding, 2) voice as responsiveness, and 3) voice as effective representation at the board; seem as far off as ever. Expect developing countries’ growing irritation at developed countries’ inaction in bringing the Fund and Bank governance in line with current economic and political realities to get even louder than before.
What may yet drown out their voices, at least regarding Fund reforms, is the increasing sense of unease at the global economic climate. Lagarde said just days before travelling to Lima that “many of [developing countries’ economic] gains now seem in jeopardy”, though she bafflingly added a quote by Peru’s Nobel laureate, Mario Vargas Llosa: “Uncertainty is a daisy whose petals are never fully plucked.” It’s hard to see what comfort Llosa’s words might be, given the IMF’s own Global Financial Stability Report, just released to coincide with the Lima meetings, which according to analysis in the UK’s Guardian newspaper cautions that “rising global interest rates could prompt a new credit crunch in emerging markets, as businesses that have ridden the wave of cheap money to load up on debt are pushed into crisis”. Little comfort emerges from Greece in the wake of the re-election of the formerly anti-austerity party, Syriza, where the government is still hoping that the IMF’s acceptance of the need for debt forgiveness will sway their European creditors to forgive yet more Greek debt. This does seem rather optimistic.
On the World Bank agenda remains the controversial and drawn out social and environmental safeguards review, now consulting on the second draft of the proposed new social and environmental framework. Three years into the review concerns remain. Many CSOs have called for a stronger recognition of human rights, which was backed up in a damning statement in a new report by Philip Alston, the UN rapporteur on extreme poverty and human rights, where he argued that the World Bank “treats human rights more like an infectious disease than universal values and obligations”. Despite these harsh words it is expected that much of the efforts in this third phase of the review will be geared towards convincing the borrower countries of the legitimacy and adequacy of the new framework, rather than addressing these outstanding concerns. With the US general election looming in 2016 and the negotiations for the next round of IDA replenishment, also scheduled to start next year, the Bank is increasingly worried that these dynamics might influence the process if not concluded soon. From civil society’s perspective the safeguards review process and the Bank’s concerns about its “stretched resources” are related, as many fear that the Bank is involved in an environmental and human rights race to the bottom as it is increasingly forced to compete with the new international financial institutions and the private sector.
As the November/December 21st conference of parties (COP) of the UN Framework Convention on Climate Change (UNFCCC) in Paris approaches, the World Bank has continued its efforts to boost its influence within climate finance circles, including through a call to “decarbonise development”, but much of the substance continues to be lacking in genuine solutions. Apart from the now compulsory high level panel event on climate change, also including the IMF, as part of the official schedule of annual meetings seminars, UNFCCC executive secretary Christiana Figueres has indicated that during the week COP donors are expected to outline their funding proposals for developed countries to contribute to the goal of delivering $100 billion a year of climate funds to developing countries by 2020. According to the Guardian a meeting on climate finance will take place on 9 October. Meanwhile the Bank has continued to support fossil fuels, with funding for a Kosovo coal power plant still under consideration.
As the World Bank’s Development Committee on the SDGs makes clear, it remains squarely focused on using its billions of dollars of public resources to leverage trillions of dollars in private sector investments. The efforts to portray the private sector as a trusted ‘development partner’ remain alive and well and are expected to remain prevalent during this year’s meetings. It will be interesting to see whether the recent Volkswagen emissions scandal (it seems most have forgotten the Libor scandal) will have any impact on this sanguine view of the role played by the private sector, particularly given that the US and Europe have relatively robust regulatory frameworks and capacities, in contrast to most poorer states.
Whatever the case, the Bank can be expected to continue to ‘market’ public-private partnerships (PPPs) and mega infrastructure projects as key aspects of its strategy, in cooperation with other multilateral development banks (MDBs), as seen in the September document produced for the G20. For its part, civil society will use the opportunity provided by the meetings to question the validity of the assertions made by the Bank and Fund about the need and desirability of the PPPs and mega infrastructure by bringing to light their continued concerns about the hidden economic and human rights risks of both. CSOs will also persist in their demand for increased transparency and accountability of IFC investments in financial intermediaries (FIs) by challenging the IFC’s assertion that they are prevented from greater disclosure by domestic legal obstacles. Following up from discussions during the spring meetings that resulted from the release of a joint CSO report on the abuse of human rights linked to IFC investments in FIs, it is likely that other cases of concerns will be brought to the attention of World Bank staff and management.
2. Agenda and background papers: International Monetary and Financial Committee (IMFC)
The provisional agenda for the autumn 2015 International Monetary and Financial Committee meeting, scheduled for Friday 9 and Saturday 10 October, is now available. The background papers are also available:
- Managing Director’s global policy agenda to the International Monetary and Financial Committee
- Progress report on the activities of the Independent Evaluation Office
Agenda and background papers: Development Committee
The agenda for the autumn 2015 Development Committee meeting, scheduled for Saturday 10 October, is now available. The background papers are also available:
- The World Bank Group support for the 2030 agenda for sustainable development
- Global Monitoring Report 2015/2016 – development goals in an era of demographic change
- 2015 shareholding review: report to governors
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.
8 October: G24 communiqué
The G24 has felt the chill wind affecting the global economy. Its communiqué revolves about money, which may seem obvious, but the confluence of concerns is particular to these challenging times, such as concerns over sources of funds including the adoption of the OECD’s tax avoidance reforms, IDA replenishment dilution, and the way that safeguards over Bank investment might get in the way of more funds, to what their own money – in the shape of quota commitments – might buy them (or not) in terms of voice and representation at the top tables of global governance.
8 October: G20 finance ministers communiqué
The G20 did not release a communique during the 2015 annual meetings.
9 October: IMFC communiqué
More than for many years, this annual meeting’s IMFC communique requires you to read between the lines, apicking out references to the unresolved and central issues for the global economy’s future. The lesson of this vagueness is that there is profound uncertainty over what the future holds, economically and politically, and just as much disagreement over how to approach the looming problems.
10 October: Development Committee communiqué
4. Highlights of civil society meetings and other seminars
Below we will post notes and minutes of sessions attended by the Bretton Woods Project:
Tuesday 6 October 2015
Wednesday 7 October 2015
Thursday 8 October 2015
5. Conclusions and wrap-up
This year’s World Bank and IMF annual meetings were hosted by Lima, Peru, the first Latin American country to host for almost fifty years. Civil society responded by organising an Alternative Forum. The meetings, which took place amidst general pessimism about the global economy, officially focused on the IFIs’ role in implementing the Sustainable Development Goals. Other issues on the agenda included governance and leadership questions, climate change and continued disagreement over the safeguards review.
For the first time since 1967, a Latin American country played host to the World Bank and IMF annual meetings, which took place in Lima, Peru. The meetings took place amidst general pessimism about the global economy, with the Fund confirming that 2015 will mark the lowest rate of global growth since the Great Recession of 2008-2009.
As was the case during the spring meetings, outside official meetings, some Bank staff and government representatives spoke of the poisonous environment within the Bank and wondered out loud about the survival of president Jim Yong Kim beyond his current term. Those who thought that Kim would survive primarily based their prediction on the lack of a viable alternative ‘acceptable’ to the US. With Christine Lagarde’s term as Managing Director of the Fund due to expire in July 2016, the Fund also faces leadership challenges. While Lagarde said during the meetings that she “is open to another term”, it is far from certain that the Fund’s shareholders would accept yet another European leader. Next year could yet see a revival of calls for a merit-based system for leadership selection at the Fund.
In addition to the establishment of alternative institutions, the annual meetings took place against the backdrop of a push for increased leverage within the UN system. This year has seen a push (thwarted by developed nations) to create a powerful intergovernmental tax body within the UN system and a UN vote at the General Assembly to establish a debt restructuring mechanism outside the IMF. In light of the global economic slowdown and in an effort to ensure the Bank’s continued relevance in an increasingly competitive environment, president Kim used the meetings in Lima to raise concerns about the Bank’s stretched position. The Bank’s precarious position was also outlined in The World Bank Group support for the 2030 agenda for sustainable development document, prepared for the annual meetings, which stated that “the [Bank’s] ability to meet growing demand is stretched to capacity. Demand might soon outstrip financial capacity.”
The Bank announced in Lima that it would substantially increase its climate finance investments to $29 billion annually, however, the real figure is $16 billion with the rest relying on ‘leveraged’ funds. It continued to promote its ‘climate change expertise’ ahead of the UN Framework Convention on Climate Change meeting in Paris in December, despite considerable concern in Peru, the region and globally about its leadership in climate finance, much due to its track record in financing fossil fuels.
The ongoing review of the Bank’s environmental and social framework was a topic of much disagreement in Lima. Disagreements allegedly include significant differences of opinions within the board of executive directors. Some Bank officials spoke darkly of a collapse in the entire review process. Behind closed doors developed and developing countries were keen to blame each other for the impasse. Meanwhile many in Lima expressed surprise and frustration by the lack of leadership on the issue by president Kim.
Despite many fine words during the meetings about the need to address inequality, it was difficult to find specific steps that will be taken by either institution to change the development model that has led to the current extreme levels of inequality world-wide. As noted by several presenters at the three-day Alternative Platform forum, organised by Peruvian civil society and attended by thousands of people, the development model proposed by the Bank and Fund, continues to result in high levels of inequality even in places, such as Peru, that have seen good economic growth. Speaking at the closure of the Alternative Platform, Nobel-laureate economist Joseph Stiglitz criticised the approach of the Bank and Fund in the country and proposed an alternative development approach. Even president Kim inadvertently criticised the Bank’s model in the country, noting in an interview that the Bank is worried about Latin America’s ability to decrease inequality “because it was so dependent on the commodity super-cycle now there is a huge challenge from the low prices of commodities”.
While the Trans-Pacific Partnership agreement was not met by large scale protest in Lima, the liberalised trade stance espoused by the Bank and Fund during the annual meetings was challenged in Europe with thousands gathering in Berlin to protest the Transatlantic Trade and Investment Partnership (TTIP). As professor Robin Broad of American University argues, the Bank and Fund support for these trade agreements and the existence of the World Bank Group’s International Centre for Settlement of Investment Disputes (ICSID) constitute a clear violation of the democratic oversight and popular participation in decision-making that the Bank and, now, the Fund so emphasise in their public statements.
While at official meetings venue civil society representatives met with Bank and Fund officials to express their concerns about the marginalisation of civil society events and inadequate space for critical voices at annual and spring meetings, local activists took a different tact and organised a large march in which thousands protested against World Bank and IMF policies. Peruvian labour union leader Domingo Cabrera captured the sentiments of the protestors by stating that “The economic growth the International Monetary Fund talks about in Peru in recent years hasn’t been felt in the working class. It’s gone to businessmen.” This strong message was supported by a Lima Declaration, which called for a radical departure from the imposition of Bank and Fund policies and strongly challenged the ‘Peruvian miracle’ rhetoric at the annual meetings.