14 June 2011
A critical analysis of the World Bank's new strategy for Africa
As nominations close on the IMF leadership race it seems certain that European countries will trample over promises for "an open, merit-based and transparent selection process", and succeed in shoe horning French finance minister Christine Lagarde into the job.
A mid April meeting of the World Bank board sub-group, the Committee on Development Effectiveness (CODE), threw the development of the Bank’s energy strategy into disarray, while NGOs complain of a weakening of Bank commitment to consultation and continue to critique Bank energy investments.
Global oil and gas company BP has pledged $5 million to the Bank's Forest Carbon Partnership Facility (FCPF).
As civil society groups and developing countries continue to warn against World Bank influence in the design and management of the new Green Climate Fund (GCF), further criticism is emerging of existing Bank climate initiatives.
An April report by the Bank’s arms-length evaluation unit faults the International Finance Corporation (IFC), the Bank’s private sector arm, for failing to pay attention to how its promotion of private sector growth impacts the poor.
A case filed by communities in India has prompted the first internal probe of the International Finance Corporation (IFC), the Bank’s private sector arm, for its lending through financial intermediaries, highlighting concerns about the transparency and effectiveness of this lending.
Trade finance refers to financing arrangements that support international trade transactions. It is one of the central parts of a new ten-year strategy paper on international trade currently being developed by the World Bank for the period between 2011 and 2021.
As revolutionary movements sweep the Arab world, the World Bank and the IMF have taken a lead in international economic engagement in the Middle East and North Africa region. But critics have warned of the dangers of locking transitional governments into long-term loans with economic conditionalities that may perpetuate the flawed development model that contributed to the crisis in the first place.
The IMF is withholding part of a loan to Pakistan over its failure to raise consumption taxes or decrease spending, but IMF-led reforms fail to address the under-taxation of the country's wealthy elite. The IMF's official approach to tax policy advice, articulated in a March board paper, shows a new appreciation for the distributional effects of taxation, but policy has not translated into practice.
NGO criticism of the World Bank's market-based approach to the global food crisis, particularly with regard to foreign agricultural investment, increased in recent months, while the Bank reiterated its existing position in April meetings.
The IMF programme in Portugal highlights the heavy conditionality attached to loans. Meanwhile, a big, and very public, fight is brewing over debt in Greece, where the IMF denies any problems.
Major developing countries have rebuffed the IMF's proposed framework on capital controls, or 'code of conduct' as it has been renamed. The board paper discussed in March drew fire from Brazil and India for being too prescriptive and suggesting that controls should only be used temporarily and as a last resort, but the policy will go ahead despite the acrimony.
Early April saw the launch of the new World Bank Group strategy for engagement in the palm oil sector, which failed to resolve civil society concerns over several issues, including the rights of indigenous peoples and how performance standards will be applied across supply chains.
At the 80th anniversary of the World Bank and IMF, global civil society must maintain pressure on the Brazilian and South African G20 presidencies to ensure the forth Financing for Development Conference in 2025 results in urgently required international financial architecture reform.
Multilateral development banks can reduce their dependence on hard currency lending and make local currency financing a central element of their developmental mandate.
