In November, civil society organisations (CSOs) participated in hearings held by the US House Committee on Financial Services in Washington DC, which included scrutinising the International Finance Corporation’s (IFC), the World Bank’s private sector arm, $5.5 billion proposed capital increase (see Observer Summer 2018).
As a result of the capital increase, US shares in IFC are due to decrease from around 22 to 17 per cent, maintaining the de facto US veto power over important decisions at the IFC. While the US is not contributing directly to the IFC’s capital increase with additional funding, US Congress’ approval to change its shareholding position is a prerequisite to moving forward with the entire IFC capital increase.
Committee chair, Maxine Waters, previously expressed concerns about accountability and transparency of IFC activities, including the International Development Association’s (IDA), the Bank’s low-income arm, Private Sector Window (PSW) (see Observer Summer 2019). Waters made her position clear again at November’s hearing, stating that, unless structural reforms are made, including regarding the PSW and financial intermediaries investments, she “is just not interested” in supporting the IFC’s capital increase.
CSOs reiterated concerns raised during discussions around the World Bank’s general capital increase last year about the need for substantial reforms to address longstanding accountability, environmental and human rights concerns, without which a capital increase could exacerbate existing problems within the institution (see Dispatch Springs 2018).
Jolie Schwarz, of US-based CSO Bank Information Center, highlighted the need for Congress to push for specific structural reforms, such as the creation of a remedy fund at the IFC. Nadia Daar, of Oxfam International’s Washington DC office, urged the committee to “use its congressional oversight role to hold the IFC accountable to those [the IFC’s] standards and promote a clear path towards required disclosure in IFC’s financial intermediary portfolio” (see Observer Summer 2016), in addition to calling for an end to IFC’s support for for-profit education providers.