- G24 communiqué (08 October): analysis, original document
- G20 finance ministers’ communiqué: none available
- IMFC communiqué (10 October): analysis, original document
- Development Committee communiqué (10 October): analysis, original document
The G24 is a grouping of some of the most important developing countries in the World Bank and IMF. It includes G20 countries, such as India, Argentina, Brazil, Mexico, and South Africa, and also Egypt, Iran, Nigeria and Venezuela, as well as a number of other countries. The G24 communiqué is traditionally the first statement of the meetings.
The G24 has felt the chilly wind affecting the global economy, and calls for “strengthened global financial safety nets”. Developing country vulnerability and above all China’s sudden apparent economic stutter appear to have softened the tone compared to what one would have found in recent G24 statements. Though not forgetting to name check the range of “complementary” precautionary financing arrangements that these same states have fostered, it is notable they are not quite ‘alternatives’, and the G24 recommend that the IFIs “step up their efforts” to support states in these challenging times.
While money – needing more of it to invest, more as a precaution against crisis and slowdown – appears to be the general theme of the meetings, the ostensible principle subject of this week is how to achieve the 2030 agenda. Understandably, achieving the SDG goals is to G24 countries a fact of needing “country ownership” and “leadership”. Once again, the IFIs are called upon to provide “scaled-up support” but with “peer learning”. Though the latter phrase sounds more like a twitter-based seminar series, it suggests that developing countries are concerned that the approaches that IFIs take may risk being too generic and one-size-fits-all. Hence they demand “a revitalized global partnership for sustainable development”.
Just in case you thought the G24 had lost all its gumption, it chimes in to remind (or warn) the IFIs that “We look forward to the operationalisation of the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB)”, while reminding multilateral development banks to “strengthen their roles in supporting infrastructure development and financing”. But some more traditional topics, still under the general umbrella of the SDGs, re-emerged in this communiqué. G24 states are clearly concerned that calling for more money on so many different fronts may instead result in one pot of money being repeatedly re-labelled for different purposes. This means that in relation to “the proposal by the WBG to leverage existing International Development Association’s (IDA) resources … [it] is critical to preserve its regular replenishments and concessionality as core elements of IDA”. For good measure, they caution that this “should not negatively impact the voice and participation of developing countries in the WBG’s governance”.
The G24 took a surprisingly lukewarm stance on the tax debate that has also dominated attention thanks to the adoption of the OECD’s tax reforms by the G20 finance ministers (though they have failed to print out or post their own communiqué on their website, so only journalists appear to have seen it). There is little new to their call for “equal footing in the implementation of G20/OECD Base Erosion and Profit Shifting (BEPS) Project and Automatic Exchange of Information initiative”. Most developing states were only observers in the process of developing these rules which many, including CSOs, have argued must go much further (which was reiterated by Nobel laureate Joseph Stiglitz). It begs the question of whether implementing rules written for you by someone else actually equates to ‘equal footing’.
Though expressing “deep disappointment with the lack of progress in implementing the IMF quota and governance reforms agreed to in 2010” and strongly urging “the US to complete ratification” there is little prospect of developing countries’ five-year wait for greater voice in the Fund to end anytime soon, and the longer this goes on, the more it becomes tangled up in a plethora of other issues. This is despite the IMF recognising the risk from stasis, which the G24 describes as “an impediment to IMF credibility, legitimacy, and effectiveness”. The unthinkable gets increasingly close, as they G24 state that they favour de-linking quota reform to bypass the problems posed by the US Congress’ continuing to deny ratification of the 2010 reforms. A world of more representative IFIs, which apparently are more needed for their money and expertise than ever, seems just as distant as when the G24 last made this complaint 6 months ago, and 6 months before that, and 6 months before that…
Even less optimistically, the five lines devoted to looking forward to the UN’s COP21 climate meeting (three of which were needed to spell out the full name of the summit) also emphasised the need to ensure “environmental sustainability” is properly incorporated “into growth and development strategies”.
The G20 is a grouping of some of the largest countries in the world. Since 2009 it has met more frequently. The official G20 communiqué has become very important because agreements at the G20 carry enough weight to be pushed through the agendas of the IFI policy setting bodies.
The G20 did not release a communique during the 2015 annual meetings.
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. The usual practice of global economic governance is now that the G20 takes decisions which are then just repeated by the representative forums like the IMF board or the IMFC. The ministerial statements are also available online.
In many ways, this is the thinnest IMFC statement your author has ever read. Rarely a gripping page-turner, this time when reaching the final paragraph the first thought that comes to mind is ‘is this it?’ In reality, it is far more about understanding what is being written between the lines, and picking out the often partial or single-sentence references to issues which are – when you scratch the surface – controversial, unresolved and central to the IFIs’ and the global economy’s future. The true lesson perhaps is twofold – uncertainty and disagreement. Uncertainty over what the future holds, economically and politically, and disagreement over how to approach the problems which are looming, increasingly intertwined and offering few easy choices.
One theme is the desire to reassure the world about China’s and other leading economies’ prospects. They soothingly indicate that China’s “ongoing rebalancing toward more sustainable growth is welcome”, and point out that “lower oil proices provide an opportunity to reform inefficient enegy subsidies … and taxes”. This means that the usual impossible balancing act is advised: “lift short-term and potential growth, preserve fiscal sustainability, reduce unemployment, manage financial stability risks and support trade.”
The IMF’s bosses reiterate that the IMF should continue to work on tax policy – the site of an ostensibly ongoing and ugly turf war between the Fund and OECD for quite some time – saying “we encourage the IMF, in cooperation with other international institutions, [italics added] to continue to play its role with regard to international tax issues”. This far-from-the-whole-story is the approach the document takes to delicately touch every other topic. In relation to the open sore that is IMF’s breaking/changing its own rules to lend to Greece since 2010, there is a single non-commital fragment saying “we welcome … the review of the exceptional access framework”. Similarly on debt issues, where most countries bar the richest recently voted at the UN to give the New York-headquartered body a rol,e all that was written was to “welcome … continued work on sovereign debt issues”. Finally, on the issue of whether China will succeed in including its currency in the basket of currencies making up the IMF’s currency measurement unit, the Special Drawing Right, was yet another “welcome” to future work.
Perhaps the only susbstantive note in the communiqué – and one that indicates what is truly going on – is the “deeply disappointed” mood of the IMFC over the “protracted delay in implementing the 2010 IMF quota and governance reforms”. Interesting times are ahead, as they have now triggered the IMF executive board to “complete its work on an interim solution”. Even this fails to reveal the true story, as the IMF begins to undergo the jostling for renewal of the managing director’s position (Christine Lagarde’s term ends in 2016). A letter by eminent figures to UK’s Financial Times newspaper points out bluntly that “The best candidate may not (in contrast to recent practice) be a mainstream politician who has built relationships and alliances with other international political personalities”.
The Development Committee is a joint committee of the boards of governors 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 sets the direction for the Bank in the coming six months. The ministerial statements will also be available online.
The Development Committee communiqué opened with a less than optimistic assessment of the global economic outlook. It echoed concerns raised in the 2014 spring meetings communiqué about the risks of poor economic growth and marked a much more cautious note from the 2015 spring meetings communiqué, which had noted that low income-countries ‘continue to record good growth rates. The communiqué recognised that “global growth remains weak, and the downside risks for the second half of 2015 and 2016 have risen … prospects of tighter financing conditions, slowing trade, and renewed weakness in commodity prices are weighing on confidence in many developing countries.” While the communiqué highlighted the need for the Bank and Fund “to play their countercyclical role when needed”, it made no mention of possibly revisiting the export-led growth model advocated by both institutions.
Also in keeping with themes of recent communiqués, the current document stressed the important role to be played by the World Bank Group (WBG) in supporting the Sustainable Development Goals (SDGs) agreed in New York in September and endorsed The World Bank Group support for the 2030 agenda for sustainable development document produced by the WBG. The communiqué continues to highlight the important role to be played by the WBG in leveraging private sector investment, as outlined in the From billions to trillions document produced by a group multilateral development banks (MDBs) for April’s Development Committee meeting. The committee called on the “IFC and MIGA to play a more catalytic role to mobilise private sector investment and finance for development”. As for increasing the Bank’s resources, the communiqué merely mentions that “the WBG must remain adequately resourced to meet its goals and to contribute to the SDGs and climate agendas.” The Committee, also in line with current trends in the ‘reinvigoration’ of the Fund (see our coverage of 2015 spring meetings), “welcome[s] the IMF’s support for the 2030 agenda.”
Considering the Bank’s 2015 shareholding review, the Committee committed to “implementing the roadmap, including agreement on a dynamic formula by the 2016 annual meetings, based on the guidance set out in the report.” In addition to its continued focus on fostering cooperation between MDBs, a thinly veiled effort to avoid the flight of under-represented developing countries in the governance structures of the Bank and Fund to the arms of the Asian Infrastructure Investment Bank (AIIB) and BRICS Bank, the communiqué highlighted the “critical importance of wider reforms to strengthen WBG responsiveness to its members and their voice and representation in its governance.” Responding to the same pressure for governance reform, whilst foregoing meaningful change, the Committee noted that it would “continue to promote diversity and inclusion to reflect better the global nature of the WBG.”
No doubt in response to recent efforts by the UN and others to establish leadership outside the OECD and other institutions dominated by the developed world, the Committee noted the importance of working to increase domestic resource mobilisation and highlighted that “illicit finance and the underlying activities, including tax evasion … represent a major drain on the resources of developing countries.” It remains to be seen, however, whether the commitment to strengthening domestic technical capacity will be coupled with an end in WBG’s support for preferential tax treatment for multinational corporations, or indeed leadership by the IFC in requiring its clients to undertake country by country reporting and reveal beneficial ownership arrangements.
Addressing climate change, despite continued concerns by civil society globally and Peruvian civil society in particular, about the negative impact of the Bank’s, technical support and development policy loans on climate change strategies in the developing world, the Committee urged the “WBG to scale up its technical and financial support and mobilize resources to assist countries in assessing climate risks and opportunities”. The Committee remained silent'[ however, on continued Bank support to extractives and industrial scale agriculture or its continued investments in fossil fuels.
Engaging with the issue of gender, as it was sadly to be expected, rather than focusing on gender equality as a fundamental human rights issue, the communiqué takes an instrumentalist approach to gender equality by focusing on its critical role in “ending poverty, boosting shared prosperity, and building more inclusive societies”. It noted that it looks forward to the implementation of the new WBG gender strategy, expected to be released by the end of this year.
On the highly contentious issue of the ongoing safeguards review, the Committee avoided reference to the responsibility of its shareholders to ensure compliance with existing human rights law and instead noted that “delivering transformative development solutions requires a focus on results, support for implementation, and fiduciary and safeguards policies to manage risks”, adding that it look forwards to the “successful completion of the review and update of the World Bank’s environmental and social framework.”
While trying its utmost to look forward with some degree of optimism, the communiqué clearly reflected the Committee’s concerns about medium-term prospects for both institutions, including a deterioration in the global economic outlook, particularly for developing countries heavily dependent on commodities exports and pressures for governance reform in the face of threats to their legitimacy from newly created ‘southern institutions’ and recent efforts to move important deliberation and decision-making processes to the UN.