The World Bank and IMF Development Committee met in Bali on 13 October within the context of the Annual Meetings held in Indonesia. The Committee’s mandate is to “advise the Boards of Governors of the Bank and the Fund on critical development issues and on the financial resources required to promote economic development in developing countries.”
The Committee began by highlighting that, despite being robust, global growth has been uneven. This trend is in danger of being exacerbated by the dynamics identified in the IMF’s World Economic Outlook report, which found that the combination of tightened monetary policy in the US, lacklustre productive growth, and ongoing policy uncertainty and trade disputes represent the materialisation of ‘headwinds’ identified in April. The Fund projected slower growth in developed and many important emerging economies for 2019 and beyond.
Relatedly, the Committee noted its concern about public and private debt, in line with IMF Managing Director Christine Lagarde’s caution that, “with global and public debt, private and public, at an all‑time high, any slight change in the wind could provoke capital outflows and economic instability in emerging markets as we see in some of those markets.” In an apparent reference to China, the Committee called for “more transparent lending practices”. In contrast to long-standing civil society calls for a multilateral legal framework for debt restructuring, the communiqué urged the Bank and Fund to “strengthen creditor coordination in debt restructuring situations, drawing on existing fora.”
In contrast to long-standing civil society calls for a multilateral legal framework for debt restructuring, the communiqué urged the Bank and Fund to “strengthen creditor coordination in debt restructuring situations, drawing on existing fora.”
While the Committee highlighted concerns about increasing debt, global uncertainty and financial instability, and referenced the importance of domestic resource mobilisation, it seemed to contradict these by strongly encouraging the Bank’s heavily criticised Maximising Finance for Development (MFD) approach (see Observer Summer 2017), the increasingly reliance on fintech -which it recognised may also “pose risks to financial stability, integrity, and consumer and investor protection” – and the International Finance Corporation’s (IFC, the Bank’s private sector investment arm) efforts to “create markets.” As professor Daniela Gabor and a group of global academics noted, the proposed MFD framework is at odds with the search for increased stability and policy space outlined in the communiqué.
Reflecting the considerable attention lavished on the newly launched Human Capital Project and Index during the meetings (see Observer Autumn 2018), the Committee stated its support for the Bank’s “emphasis on … more effective and inclusive investments in better learning and health outcomes.” In a significant understatement, it recognised “the potential for further methodological refinements.” Civil society fears that the human capital project will result in further privatisation of essential services, with the communiqué noting that, “Given the strains on public finance systems, new approaches will be required.”
Again, seemingly without irony given deepening fears over inequitable growth and the various concerns raised about the methodology underpinning this year’s World Development Report on the changing nature of work, the Development Committee welcomed the report, highlighting the need for “evidence-based policy making”. Without reference to state obligations under international law and contrary to the rights-based UN approach to universal provision (see Observer Spring 2017), the Committee noted that “effective revenue mobilization strategies and approaches” should support “health and education systems with universal coverage”. Seemingly further supporting a minimalist approach to the provision of social protection, the communiqué also encouraged the Bank to help clients develop systems that build “incentives for work.”
Referring to the agreed General Capital Increase for the International Bank for Reconstruction and Development (IBRD, the Bank’s middle-income lending arm) and IFC, the Committee thanked the Board of Governors for “submitting the draft resolutions on the IBRD and IFC capital increases to Governors.” It also welcomed “the adoption of the IBRD capital increase resolutions” and expressed encouragement at “the rapid pace of approvals of the IFC resolutions” and “the ongoing efforts by shareholders to secure outstanding adoptions.” No mention was made of the need for reform of staff incentive structures and the establishment of a robust human rights policy to anchor Bank programming (see Observer Summer 2018).
The Committee concluded by expressing its appreciation to the Government of Indonesia for hosting the meeting, a sentiment not shared by the organisers of alternative civil society-led events such as the People’s Global Conference Against the IMF and World Bank, which “strongly [condemned] the repressive measures taken by the Indonesian government to derail the PGC.” As the PGC organisers highlighted throughout the meetings through social media and other channels, the events they worked so hard to organise to provide critical voices an opportunity to voice their peaceful dissent of World Bank and IMF policies, were targeted and closed down by Indonesian authorities using a variety of means. As if any additional evidence were necessary, the struggles of the PGC on the side-lines of the Bank and Fund’s flagship event, where civil society participants could have expected some protection arising from the events global visibility, highlighted the plight of critical civil society voices and the extent of the much-talked about “closure of civil society space”.