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Bretton Woods Observer Winter 2017/2018
A quarterly critical review of developments at the World Bank and IMF

Published by BRETTON WOODS PROJECT
Working with NGOs and researchers to monitor the World Bank and IMF

For a full pdf version go to
http://www.brettonwoodsproject.org/wp-
content/uploads/2017/12/observer_winter_17-18_screen.pdf

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1. Civil society still waiting for ‘IMF Spring‘ to blossom
(RIGHTS/Analysis)
2. Call for critical resources on World Bank and IMF for 2017
(KNOWLEDGE/Background)
3. World Bank and IMF civil society working group election results
announced (ACCOUNTABILITY/news)
4. Debt sustainability review: Tinkering around the edges while
crises loom (FINANCE/analysis)
5. Chinese growth's contribution to poverty reduction challenges
World Bank and IMF neoliberal policies (KNOWLEDGE/ analysis)
6. After 15 years, World Bank’s Doing Business Report still missing
the mark (KNOWLEDGE/analysis)
7. CAO released damning audit of IFC hydro project in Guatemala
(ACCOUNTABILITY/news)
8. IMF and Bank “intensifying” tax work: Possible progress or
consolidating control? (FINANCE/news)
9. Shared prosperity? WBG fails to progress on energy access for poor
(ENVIRONMENT/news)
10. CSOs call on World Bank to prioritise forests in climate action
(ENVIRONMENT/news)
11. CSOs call on World Bank to halt its aggressive support of PPPs
(PRIVATE SECTOR/news)
12. IFC to revisit its development outcomes framework
(ACCOUNTABILITY/news)
13. Long-awaited ESF Guidance Notes fail to meet CSO expectations
(RIGHTS news)
14. CSOs express concern about IMF's strongly divergent social
protection approach (RIGHTS/news)
15. Landmark climate-change complaint against IFC lodged in
Philippines (ENVIRONMENT/news)
16. COP 23 puts Bank-backed climate insurance in spotlight
(ENVIRONMENT/news)
17. New IMF conditionality database launched
(CONDITIONALITY/background)
18. Bank and Fun(d)speak of the year 2017(HUMOUR/commentary)

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RIGHTS/analysis

Civil society still waiting for ‘IMF Spring’ to blossom

Summary
-IMF further embraces inequality rhetoric at annual meetings
-Civil society concerned about equity impacts of IMF policy advice
-CSOs urge Fund to acknowledge and address increasing policy
contradictions

The word of the week throughout the 2017 IMF and World Bank annual
meetings (see BWP Dispatch) in the IMF was undoubtedly ‘inequality’.
From the IMF’s managing director, Christine Lagarde, proclaiming to
much surprise that rather than taxing the rich, “the most efficient
way to reduce inequalities would be to close the gender gap”, to the
Fund’s flagship 2017 Fiscal Monitor being titled Tackling Inequality.
Perhaps this increased focus since 2013 finally elevated the
‘defining issue of our time’ to the firmament of ‘core’ IMF work,
ensuring its survival within the Fund beyond that of a temporary fad
and in part answering the call of civil society to protect the
victories of the ‘IMF Spring’ (see Observer Summer 2017).

Responding to this significant shift in IMF rhetoric, civil society
organisations (CSOs) were out in full force throughout the week,
armed with new in-depth research and the voices of those directly
impacted by the ways in which IMF policy advice still fuels
inequality in practice, calling on the IMF to walk the talk on
inequality.

The Fight Inequality Alliance, a broad CSO coalition, produced a
statement by 133 CSOs and organised a public demonstration at the
annual meetings. It declared that, “We are united in believing that
the World Bank and IMF are too often fuelling inequality”, and that
while these institutions have recently acknowledged the inequality
crisis, “for 40 years they have been among those responsible for
creating and maintaining it”.

Another statement prepared by Global Unions, a collective of
international trade unions, noted that “action in … policy advice has
been slow to catch up to the … research and discourse on the need to
reduce inequality”. Rejecting the IMF’s claims to the contrary, it
added that “many IMF programmes or policy recommendations continue to
support measures that weaken minimum wages, employment protection
regulations or collective bargaining institutions … despite the role
that coordinated collective bargaining systems have played in
achieving more equal income distribution”.

A 2017 report by New Rules for Global Finance, Friedrich-Ebert
Stiftung and Development Finance International (DFI), Are the
Multilateral Organizations Fighting Inequality?, took stock of
whether international institutions are “being successful in helping
governments fight inequality”. While presenting the report, Matthew
Martin of DFI explained that “compared to others like the World Bank,
the IMF looks better with regard to inequality, but only because
everyone is doing very badly”.

A Christian Aid March report examined how in Latin America and the
Caribbean, intersecting inequalities such as those based on identity,
gender, economic situation, climate change impact or geographic
location are eexacerbated by regressive fiscal policies. During a
presentation of the report at the annual meetings, speakers concluded
that the policies and the practices of the IMF and World Bank do not
adequately address this intersectionality. In turn, Bretton Woods
Project’s Compendium of Feminist Macroeconomic Critiques outlined the
ways in which commonly-prescribed IMF policies continue to undermine
women’s rights and gender equality, despite the Fund’s shift in
rhetoric.

Surveillance pilots – still myopic on inequality
---------------------------------------------------------------------
Perhaps anticipating these critiques, the IMF has explicitly and
repeatedly indicated over the last year that it is committed to
operationalising its inequality research. In the words of Lagarde,
the IMF is committed to “Not just words [but], action”, which it will
pursue primarily through piloting inequality analyses in surveillance
reports, the annual country documents the IMF produces on the state
of the macro-economy of its members.

Oxfam analysed these claims in an October report, examining 15
surveillance inequality pilots, and found “no assessment of the
distributional impacts of the core macro-economic targets and policy
advice” and that “none of the pilots fully explored alternatives to
rapid fiscal and monetary tightening”. It concluded that by focusing
on compensating losers rather than questioning the structural reforms
themselves, the IMF is “not promoting policies that reduce
inequality”. Another Oxfam report examining surveillance reports for
five countries found a gap between the IMF’s commitment to leveraging
fiscal policy to fight inequality and its actual tax advice to
developing countries, concluding the IMF had contributed little to
tax-progressivity in these countries.

An ActionAid International study, meanwhile, reviewed 124
surveillance reports from 2016, demonstrating that the Fund now
recommends action to increase female labour force participation in
more than one in five countries, as echoed by a similar surveillance
analysis by the Centre for Global Development. However, close to 80
per cent of those countries were also told by the IMF to “start,
increase or not deviate from plans on fiscal consolidation” in the
same surveillance reports, underscoring that IMF policy advice
continues to ignore the contradiction that fiscal space is needed to
address gender inequality.

Mounting evidence of increasing policy contradictions
---------------------------------------------------------------------
Common threads of these reviews included the finding that the Fund’s
approach to inequality is unsystematic, as well as contradictory to
other IMF policy advice. Most reviews also found little evidence of
consultation with relevant national civil society groups, and warned
this work will not be sustainable if not further institutionalised
within the Fund, as echoed by Chapter V in BWP’s Compendium. As the
Fund is expected to develop its first ‘official’ lessons-learned of
the inequality pilots in its current interim surveillance review, to
be completed in 2018, civil society is eagerly awaiting to see
whether any of its analyses will be taken into account.

More broadly, the Fund’s defence of its inequality work and civil
society’s critiques remain disconnected. The Fund’s narrative seems
to be that the institution just needs time to operationalise its new
research findings but that it generally agrees with civil society and
is heading in the right direction. Yet, the more nuanced critique
common to almost all civil society analyses is that there are major
conflicts between meaningfully tackling inequality and the bulk of
the IMF’s conventional policy advice, which the IMF fails to
recognise. This contradiction was exemplified by the comments of the
IMF Fiscal Affairs Department’s Marialuz Morena Badia, who, while
repeatedly stressing the IMF cares about gender equality and
acknowledging fiscal space is needed to achieve it, when asked about
the harmful impacts of the Fund’s austerity policies, still
responded: “in terms of austerity … you cannot defy gravity”. Lovisa
Möller of ActionAid responded, “When austerity means that the state
fails to provide, societies are able stay afloat because they shift
the costs to women. The IMF’s closed-mindedness towards recognising
and redressing the gendered impacts of their core policy
prescriptions, especially austerity, demonstrates it still has a very
long way to go on inequality.”

tinyurl.com/IMFinequalityspring

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KNOWLEDGE/background

Call for critical resources on World Bank and IMF for 2017

Every year, the Bretton Woods Project publishes a selection of
recommended critical resources on the World Bank and IMF (see
Recommended Resources for 2016 and 2015). If you have suggestions of
films, books, reports and papers published in 2017 that would be
useful to our readership and community, please let us know using the
subject line ‘2017 resources’ to info@brettonwoodsproject.org.

tinyurl.com/2016BWPresources

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ACCOUNTABILITY/news

World Bank and IMF civil society working group election results
announced

In November, the Civil Society Policy Forum (CSPF) interim working
group, created in 2016, announced the names of individuals elected by
civil society to serve on the permanent CSPF working group. The
permanent working group will serve as an interlocutor with the Bank
and Fund’s civil society teams on the planning and implementation of
the CSPF at the IMF and World Bank spring and annual meetings (see
BWP Dispatch). The working group is expected to commence work in
2018, after the interim working group completes drafting its terms of
reference by the end of December.

The new members are: Godswill Agbagwa (Center for Social Awareness,
Advocacy and Ethics Inc., Nigeria), Reema Nanavaty (Economic and
Rural Development, SEWA, India), Frank Vogl (Transparency
International, Germany), Marcelo de Jesus (Fores, Argentina), Walid
Alkhatib (Center for Strategic Studies University of Jordan, Jordan),
Abdul Qadir (Atlas Service Corps, USA), Faustina Fynn-Nyame
(Population Services International, USA), and Zahra Bazzi (Arab NGO
Network for Development, Lebanon). The 2018 working group will also
include three interim members, who are staying on for continuity, as
well as two-to-three Indonesian representatives, as the 2018 annual
meetings will take place in Bali, Indonesia, in October.

tinyurl.com/CSPFCSOteam

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FINANCE/analysis

Debt sustainability review: Tinkering around the edges while crises
loom
Guest analysis by Mark Perera of Eurodad and Tim Jones of Jubilee
Debt Campaign

Summary
-IMF and World Bank reviewed their Debt Sustainability Framework
-Despite some positive changes, key issues ignored amid ongoing risk
of new crises

Under the joint Debt Sustainability Framework (DSF) of the World Bank
and IMF (Bretton Woods Institutions or BWIs), regular assessments of
the risk of external debt distress are conducted for all countries
that are eligible to borrow from either institutions’ concessional
lending funds (the International Development Association and Poverty
Reduction and Growth Trust, respectively). The DSF directly impacts
the scale of lending by the World Bank and other multilateral
development banks, and influences lending decisions by governments
and the private sector.

Latest DSF review completed
---------------------------------------------------------------------
The development of the DSF in 2005 brought in a welcome systematic
monitoring of countries’ debt situations, placing debt at the centre
of the BWIs’ economic analyses and lending operations. Its forward-
looking approach reflected the importance of preventative action to
mitigate debt crises. But since its introduction, civil society has
pointed to substantive problems with its approach, particularly its
disconnect from debt relief, and its conception of sustainability in
terms of how repayable debt is, rather than the impact debt levels
have on a country’s ability to safeguard the rights of its citizens
(see Update 40).

The latest DSF review, to which over 30 CSOs made a joint submission
in June 2016 (see Observer Summer 2016), was completed in October.
The review adopted some of the submission’s recommendations and
introduced a number of key features to improve the rigour of the
IMF’s technical assessments, including analysis of some of the
liabilities arising from public-private partnerships (PPPs) –
instruments attractive to governments as they can enable debts to be
hidden (see Observer Spring 2017). Risks of government liabilities
arising from private external debt were also given greater
importance, but focus was limited to the financial sector. Closer
attention will also be given to specific risks arising from natural
disasters and commodity price shocks.

Another positive development following the review was the move away
from exclusive reliance on World Bank Country Partnership and
Institutional Assessments (CPIAs) (see Update 43) when gauging how
much debt a country can carry. The new DSF added a new ‘composite
country indicator’ with historical and projected data, including on
domestic and world growth as well as levels of international
reserves. This reflected the questionable relevance of CPIA scores,
which effectively measure levels of market liberalisation, to assess
debt crisis risks. The new DSF also shifted from a narrow focus on
overall debt figures to consider the impact of public investment on
growth, acknowledging the potentially productive nature of debt
financing, aiming to make the IMF’s growth projections more realistic
and therefore improve debt servicing projections.

Major CSO concerns ignored, as risk of crises remains
---------------------------------------------------------------------
Despite the steps forward, the BWIs have largely ignored civil
society concerns raised in the submission about the basic DSF
process, including UN and CSO calls for assessments to be carried out
by an independent body, rather than by international financial
institutions who are themselves major lenders. Discretionary
judgement remains a key component of the framework and a September
2017 research paper by Lang and Presbitero demonstrated links between
improved DSF ratings and political support from the main
international financial institution (IFI) shareholders. The review
fails to acknowledge these civil society concerns directly, but does
note that staff judgement has sometimes led to over-optimistic DSF
ratings: specific reference is made to Mozambique between 2009 and
2014, a country now in major debt crisis, where staff continually
downgraded the country to low risk, despite data pointing to medium
risk (see Observer Spring 2017).

No consideration is given in the review to the impact of a country’s
debt burden on its ability to meet its human rights obligations and
development goals. Scope remains for the IMF to improve this when
implementing the current reforms, for example by basing country
growth and debt servicing projections on ring-fenced social spending
to meet minimum floors, as recommended by the International Labor
Organization (ILO). Nor have steps been taken to incentivise the
better use of loans by recognising that where good transparency and
accountability practices exist, debts are likely to be better spent,
and so governments have more space to borrow for useful investments.

The opportunity has also been missed to establish a link between the
DSF and a country’s option to seek debt relief. This would ideally
rely on a pre-defined risk definition triggering a stay on payments
and obliging a country to enter discussions with all its creditors,
supported by an independent debt workout institution.

The technical changes introduced in the current review are largely a
step forward, but by the IMF and World Bank’s own admission in the
review, the revised DSF would still have missed one-in-five past
crises. Debt levels are rising globally: three more countries have
gone into DSF-defined debt distress in 2017 alone (Chad, Gambia and
South Sudan, joining Grenada, Mozambique, Sudan and Zimbabwe), and
just 11 of 67 countries are currently deemed by the DSF to be low
risk – the lowest number since assessments began. With the storm
clouds gathering so ominously on the horizon, the IMF and World Bank
have to address the fundamental shortcomings of the DSF, if it is to
be a genuinely effective tool in the prevention of future crises.

tinyurl.com/DSFreview

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KNOWLEDGE/analysis

Chinese growth’s contribution to poverty reduction challenges World
Bank and IMF neoliberal policies

Summary
-Report finds two-thirds of reduction in extreme poverty during the
past 25 years was in China
-China’s growth not based on neoliberal reforms espoused by Bank and
Fund
-Global growth during neoliberalism substantially lower than period
of state intervention

October 17 marked the 25th anniversary of the International Day for
the Eradication of Poverty. According to the Sustainable Development
Goals (SDGs) website, examples of impressive recent achievements in
combating extreme poverty include a decrease in the global poverty
rate from 28 per cent in 1999 to 11 per cent in 2013. The standard
narrative, echoed by former US President Barack Obama during his
speech at the UN in September 2016, is that the neoliberal policies
of ‘globalisation’ and ‘open markets’ have been the driving force
behind the significant drop in poverty rates (see Observer Spring
2016).

As argued by Babb and Kentikelenis in their 2017 paper, the World
Bank and IMF in turn played a key role in developing and enforcing
neoliberal policies associated with, inter alia, globalisation and
open markets globally. While likely driven by a fear of an anti-
globalisation backlash (see Dispatch annual meetings 2017) and
perhaps sharing UNCTAD’s assessment that “anxiety is fast becoming a
new zeitgeist of the twenty-first century global economy”, the Bank
and Fund have recently been said to soften their stance on structural
adjustments and neoliberalism generally (see Observer Summer 2016,
Summer 2017).

BWIs – taking credit where none is due?
---------------------------------------------------------------------
Despite these rhetorical reassessments, the Bank and Fund, like
Obama, remain in no doubt that the policy prescriptions they
energetically promulgated during the past 25 years can be credited
with the success in global poverty reduction. Speaking in Washington
ahead of the World Bank and IMF’s annual meetings in October, World
Bank president Jim Yong Kim called China’s efforts to eliminate
poverty historic, noting, “With [its] embrace of the global market,
China has lifted over 800 million out of poverty”. Kim is indeed
correct in his assertion that Chinese efforts have been historic. An
October report by the US-based think tank Center for Economic and
Policy Research (CEPR) supports his point, noting that “for the 25
years [up to 2016]… two-thirds of the approximately 1.1 billion
people who were pulled across the extreme poverty line were in
China”, adding “from 1981 to 2010, it is even more a story of Chinese
success: about 94 percent of the reduction of extreme poverty was in
China.” However, Kim’s implicit assertion that Chinese growth is due
to its embrace of global markets in line with Bank and Fund
neoliberal prescriptions has been robustly challenged.

China’s growth not result of neoliberal policies
---------------------------------------------------------------------
CEPR’s report stressed that “Chinese global economic integration was
not based on neoliberal reforms and policies that were adopted by the
vast majority of low and medium-income countries since the 1980s”. It
noted: “China did not establish an independent central bank or
abandon the industrial and development policies of prior decades. ...
They maintained state control over the banking system, had strict
currency controls and a huge role for state-owned enterprises, and
until recently the state controlled most investment.”

Neoliberalism’s failure to deliver growth
---------------------------------------------------------------------
The fact that China’s growth has largely been achieved by policies
that contravene the Bank and Fund’s received wisdom poses a
significant challenge to the legitimacy of the models they have
historically supported. China’s departure from the neoliberal model
is also stressed by Ha-Joon Chang. Putting the issue into historical
context, Chang has noted that “the popular impression, largely
created by neoliberal propaganda, is that neoliberalism … is able to
generate rapid growth, albeit often at the cost of worsening other
‘social problems’”. However, he stressed that “Per capita income
growth in the developed countries slowed from 3.2% to 2.2% between
the interventionist period 1960-80 and the neoliberal period of
1980-99, while that in the developing world halved from 3% to 1.5%”.
Echoing Prates and Peruffo’s 2016 article What is left of the rising
South, Chang stressed that “without … China and India, two countries
that have definitely not followed the neoliberal recipe, the 1.5%
rate would have been close to 1%”.

The importance of policy space
---------------------------------------------------------------------
UNCTAD’s 2017 Trade and Development Report must also have made
uncomfortable reading for the Bank and Fund, as it noted that the
international consensus during the high-growth, interventionist and
so-called, golden age of capitalism, “required the leading economies
(and their corporations) to accept some constraints on their ability
to dominate international markets and to move capital freely from
location to location” – clearly not the case under the neoliberal
policies supported by the Bank and Fund. Noting that the rupture with
the consensus was followed by hyperglobalisation in the 1980s, the
report outlined its characteristics and consequences: “extensive
deregulation of markets - particularly financial and currency markets
… [and] the curtailment, and sometimes even the elimination, of
policy measures previously used by States to manage their integration
into the global economy.” As Chang and others have argued, the policy
space available to China to manage its integration into the global
economy has been pivotal to its success. This is however
conspicuously absent from the Bank and Fund’s story. As the UNCTAD
report noted, this freedom was to a large extent denied to adherents
of the Bank and Fund’s neoliberal policies (see Observer Summer 2017,
Summer 2016, Winter 2014).

These reports and papers challenge the Bank and Fund’s claim that the
adoption of neoliberal policies, while perhaps painful in the short
term, is worthwhile in the long run. Given the well-documented
negative impacts of the years of structural adjustment programmes
forced upon countries during the slow growth period of
hyperglobalisation (see Observer Winter 2015), the confirmation that
the bulk of progress made in global poverty eradication can be
attributed to policies that contravene Bank and Fund dogma is damning
indeed.

tinyurl.com/chinapovertyreduction

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KNOWLEDGE/analysis

After 15 years, World Bank’s Doing Business Report still missing
the mark

Summary
-DBR incentivises tax competition
-CSOs concerned DBR does not promote inclusive growth

In October, the World Bank published its 15th Doing Business Report
(DBR), Reforming to Create Jobs, noting that 119 economies had
carried out 264 business reforms in the past year to “create jobs,
attract investment and become more competitive”. The Bank stated in a
press release that the DBR provides “objective measures of business
regulations and their enforcement across 190 economies”, whilst
encouraging economies to “compete towards more efficient regulation”
(see Observer Summer 2017). It continued that “3,188 business reforms
have been carried out since it began monitoring”.

From its inception, civil society organisations (CSOs) have been
critical of this influential publication for promoting one-size-fits-
all solutions to development. CSOs argue that the Bank and IMF use
the DBR to promote deregulation and neoliberal reforms, based on the
unfounded claim that more ‘business friendly’ regulations play a key
role in lowering income inequality, while not taking into account the
social or economic benefits of regulation and costs of de-regulation.

Simeon Djankov, the creator of the Doing Business series, said in an
October press release that, “Reforming in the areas measured by Doing
Business can be particularly beneficial to employment creation when
those reforms take place in the areas of starting a business and
labor market regulation.” Considering that claim, Matti Kohonen from
Christian Aid UK stressed that, “This microlevel view is often at
odds with a macro-level perspective, where something that may be
beneficial at an individual firm owner level (e.g., lesser labour
regulation), may hurt macroeconomic objectives – such as greater
labour productivity through upskilling of committed employees”. He
added that, “Recent macroeconomic perspectives on women’s labour
market participation, and tackling inequality may be at odds with the
entire DBR.”

Civil society further criticised the DBR’s ranking of nations as
based on narrow business interests over those of citizens and
countries (see Observer Autumn 2013, Update 86, 85). For example,
according to the International Trade Union Confederation (ITUC),
eight out of the DBR 2017’s “top 10 improvers” had poor or worsening
performance on workers’ rights. According to UK-based charity CAFOD’s
2013 research, the DBR failed to match the priorities needed for
small private sector enterprises to grow. These include ensuring
adequate funding for small enterprise support programmes and public
services, as well as recognising informal workers’ organisations and
collective bargaining processes. In November Peter Bakvis of ITUC
commented on Inequality.org that, “giving better scores to low-tax
venues is in clear contradiction with the World Bank’s stated
objective of giving governments the means to provide essential public
services, especially to the poor, and reducing inequality”. Despite a
series of methodological changes in 2015 after extensive criticism of
the report from the Bank’s own Independent Evaluation Group (IEG) in
2013 (see Observer Summer 2017, Update 86), these civil society
critiques still stand.

DBR’s policy impacts
---------------------------------------------------------------------
Belgium-based network Eurodad noted in 2015 that while “there is
little connection between the report’s findings and reality on the
ground, it nevertheless has a notable impact on policy-making”,
informing reform programmes in many developing countries. Worldwide
governments take note of their DBR ranking. For example, in November,
the Ukraine Business Journal pondered How Can Ukraine Rise on the
World Bank’s Ease of Doing Business Index? and The Times of India
reported that “investor sentiment got a boost from World Bank’s Ease
of Doing Business report where India jumped 30 places on back of
recent reforms”. The Economic Times noted that “India is gearing up
to leapfrog into the top 50 with around 90 specific reforms lined up
for various ministries, top officials said”. These reforms, for
instance, include a decrease in the number of processes needed to
register a business, but also regressive tax reforms such as the
Goods and Services Tax (GST) that, as outlined by Indian economist
Jayati Gosh, will increase the tax burden on low-income households
and as stressed by by Delhi-based lawyer Tara Narula, impact women
disproportionately.

Considering the DBR’s benefits, Djankov noted that “in addition to
good policy, once you start ranking countries and comparing them,
natural competition like a ‘World Cup’ or the ‘Olympics’ comes
about”. However, countries are not firms that compete on an open
market place. States have human rights duties towards their citizens,
and fulfill a public mandate by the electorate rather than price
competition pressures in markets. As stressed by UN Independent
Expert, Alfred de Zayas, the Bank and the Fund should “finally let go
of the outdated conditions of privatisation, deregulation of markets,
and ‘austerity’ in social services, which have not given states
adequate policy space to fulfil their human rights obligations” (see
Observer Autumn 2017).

DBR and inequality: correlation without causation?
---------------------------------------------------------------------
In line with the Bank’s twin goals of eliminating extreme poverty and
boosting shared prosperity, and justifying its relevance, the DBR
noted that, “Economies with poor quality business regulation have
higher levels of income inequality on average.” However, cautioning
against the Bank’s jump from correlation to causation, Bakvis noted
that the 20 top DBR countries are almost all advanced economies with
low Gini coefficients, while the bottom 20 countries, including
Afghanistan, Venezuela, Somalia and Yemen, are in severe civil or
political conflict. Bakvis concluded “it seems ludicrous for the Bank
to imply that the only thing these conflict countries have to do to
achieve more equal income distribution is to deregulate business.”
While it may be true, as the report claims, that “economies with
better business regulation have lower levels of poverty, on average”,
the fact that China and Vietnam’s significant progress on poverty
reduction was accomplished without DBR promoted policies (see
Observer Winter  2017-2018) brings into question the report’s
implicit link between deregulation and decreased poverty.

Last year’s DBR introduced a gender component to three indicators,
namely starting a business, registering property and enforcing
contracts. In responce, the Oakland Institute argued, a “gender
equity [component] doesn’t make the policies promoted by the Bank
more equitable. The report’s country scorecards show that the Bank
gives better Doing Business scores to nations that favor corporate
profits over citizens and countries’ interests.” For example, while
India has improved significantly in the DBR rankings, according to
2017 research by Lucas Chancel and Thomas Piketty, income inequality
in India is at its highest since 1922. Shipra Dawar, founder of
ePsyclinic, an online mental health clinic, commented to Forbes that,
“While it is great that India has improved its ranking in doing
business, and young entrepreneurs will benefit from it, we are
overlooking the importance of gender equality. It’s not possible for
India to become a global economic power if half of its population is
ignored, and not given more economic opportunities”. Dawar’s comments
are supported by data from the World Economic Forum (WEF), which
showed that India fell 21 places to 108 in the 2017 Global Gender Gap
Report Index, even as its DBR ranking improved.

Given the persistent flaws of the DBR and the Bank’s supposed focus
on sustainable and equitable growth, it should heed civil society’s
calls, echoed by the IEG’s report, to cease country rankings and to
ensure that indicators used are robustly linked to poverty
eradication and inclusive growth objectives.

tinyurl.com/DBR17

=====================================================================
ACCOUNTABILITY/news

CAO released damning audit of IFC hydro project in Guatemala

Summary
-CAO audit finds IFC failed to identify gaps in project’s social and
environmental assessment
-Communities impacted by the project face impacts on water source,
livelihoods and levels of violence

In late October, the Compliance Advisor Ombudsman (CAO), the
accountability mechanism of the International Financial Corporation
(IFC), the World Bank’s private sector arm, released a highly
critical audit of the IFC’s investment in Guatemala’s Santa Rita
hydroelectric dam project. The plant is managed by a local
development company, Hidroeléctrica Santa Rita (HSR). HSR was partly
owned by Latin Renewables Infrastructure Fund (LRIF), a financial
intermediary (FI), in which the IFC made an equity investment in
2012. The IFC stressed in its reaction to the audit that LRIF
discontinued its involvement in the project.

The CAO audit was prompted by a complaint filed in October 2014 by
Colectivo Madre Selva and the Consejo de Pueblos de Tezulutlan on
behalf of several communities downstream and upstream of the Santa
Rita project. The complaint alleged that “the project did not meet
IFC’s consultation requirements for free, prior, and informed
consent… [and] has not considered its potential for adverse impacts
on local water sources.” The communities also claimed they “fear that
the project will compromise their ability to generate income and to
sustain their livelihoods … [and asserted] that their opposition to
the project has been met with violence, repression, and
criminalization of community leaders.”

The CAO’s audit noted that the IFC’s review of the Environmental and
Social Due Diligence (ESDD) of its client in 2012 failed to identify
“(a) gaps in the environmental assessment information presented,
including that it related to an earlier – and significantly smaller –
version of the project; (b) the lack of a social impact assessment;
(c) inadequate analysis of the project’s expected impacts on
biodiversity, land use, drinking water, livelihoods, and cultural
heritage; and (d) the lack of an assessment of whether the dam met
World Bank design and safety standards.”

Community demands accountability through protest
---------------------------------------------------------------------
The project has been the site of determined local opposition since
2010. The CAO reported that in July 2013 a road block, which is still
in place, was established by community members at the nearby village
of Monte Olivo. Consequently, construction at the project was
suspended, and LRIF has advised the CAO that it no longer plans to
develop the project. Documenting community struggle against the
project, an October Mary Knoll Office for Global Concerns newsletter
reported that 160 indigenous families were displaced in 2014 by more
than a thousand police officers. Local communities called for a UN
investigation of the project in October 2014. Considering the
community protests, the audit underscored that the “IFC did not
sufficiently engage with the Fund [LRIF] to address the rising
tensions, violent incidents, and serious allegations of E&S
[environmental and social] impacts” and that “the prevalence of
community opposition was sufficient for IFC to require a re-
evaluation of the applicability of its Indigenous Peoples standards
to the project.”

Risk assessment ignored project’s location in indigenous area
---------------------------------------------------------------------
The audit found that while the IFC correctly categorised the project
as high-risk, its “pre-investment review was not commensurate to
risk” and the “IFC did not have an adequate understanding [of] the
contextual risks associated with its investment”. It further stressed
that the IFC “gave insufficient consideration to the challenges that
the Fund [LRIF] would face in implementing IFC’s recently updated
Indigenous Peoples requirements.” According to a 2015 report The
Suffering of Others by several NGOs, including Oxfam International,
the IFC claimed as late as October 2014 that “there were ‘no high-
risk projects’ funded by their client”. The report argued this
initial “assessment entirely ignored or downplayed the fact that the
project was situated in an indigenous area”. The report further
alleged that only after public exposure of the project did the IFC’s
website disclose the project as high risk. The IFC’s initial risk
assessment seems at odds with the Bank’s appalling track record in
Guatemala, where several hundred indigenous people were massacred
during the construction of the Chixoy dam in the 1980s. Additionally,
severe conflicts had already occurred at a similar project, Cambalam,
where a state of emergency was declared in the same year as LRIF’s
investment in Santa Rita (see Observer Spring 2014, Bulletin February
2014).

Kate Geary of NGO BIC Europe commented, “In the face of these damning
findings, the IFC’s noncommittal response is highly disappointing.
Lending through intermediaries is a highly risky business and demands
that the IFC assesses and manages the risks to people and the
environment posed by sub-projects all the more seriously.”
Additionally, Geary noted that, “Unfortunately, IFC’s dismissive
attitude to this audit is part of an ongoing trend. The IFC must take
seriously the lessons learned in this case – otherwise how will
adequate reforms be put in place to avoid such problems happening all
over again to other communities?”

The audit adds to previous concerns raised by the CAO about the IFC’s
FI investments in its 2013 FI audit and March compliance report (see
Observer Spring 2017). It also comes in the context of an increasing
number of cases unearthed by civil society, including the IFC’s
support for coal in contravention of the World Bank’s policies, their
role in land-grabbing across Africa (see Observer Winter 2017-2018,
Summer 2017, Winter 2017) and the World Bank’s push for hydropower
beyond Santa Rita (see Observer Spring 2016, Bulletin February 2014).
The IFC’s new ‘de-risking’ approach to ‘leveraging’ private sector
investment (see Observer Autumn 2017) as outlined in IFC CEO Philippe
Le Houérou’s October “letter” leaves little hope that the experience
of the Santa Rita community will not be duplicated elsewhere.

tinyurl.com/CAOGuatemala

=====================================================================
FINANCE/news

IMF and Bank “intensifying” tax work: Possible progress or
consolidating control?

Summary
-World Bank and IMF are stepping up work under the Platform for
Collaboration on Tax
-New tax initiatives focus on progressivity
-Civil society cautions against top-down, IMF-led approach

A World Bank and IMF (Bretton Woods Institutions or BWIs) organised
event during their 2017 annual meetings (see BWP Dispatch) on taxing
wealth in developing countries led Alex Cobham of Tax Justice Network
in his October blog to ask, Is tax justice the new Washington
consensus? The Bank and Fund are “intensifying” their tax work under
the umbrella of the Platform for Collaboration on Tax (PCT), a
partnership between the BWIs, OECD and UN. Perhaps this signifies the
BWIs starting to slowly chip away at long-standing civil society
criticisms about their role in promoting the ‘tax consensus’ that
promotes regressive taxes and underemphasises illicit financial flows
(see Observer Autumn 2016).

Building a “social consensus” on revenue targets
---------------------------------------------------------------------
For example, Medium-Term Revenue Strategies (MTRS) are a new PCT
concept described as a “social contract on … revenue mobilisation …
for 5 to 10 years with due consideration to the poverty and
distributional implications of the associated measures”. It is a
process for comprehensive tax reform underpinned, in the words of the
PCT, by a “social consensus”, to be achieved through “national
dialogue led by political leaders with representatives of the
community … that determines society’s expectations for the level of
public services and the related expenditure needs that determines
revenue collection targets”. In return for signing up to an MTRS,
countries will receive technical advice from the PCT, in particular
the IMF. Setting aside the question that arises from this initiative
of how governments will be expected to navigate the delicate
political economy of tax reform, Kwesi Obeng of Oxfam pointed out
that this idea is not new. It was already developed in the Monterrey
Consensus of 2000, meaning it has taken the organisations that make
up the PCT 17 years to catch up to the idea of citizen engagement
being crucial for tax reform. Obeng also warned that shrinking civil
society space globally poses a major threat to the MTRS process, and
must be acknowledged and reversed.

Measuring equity impacts
---------------------------------------------------------------------
The Bank and Fund are also developing a new tool, the Tax Policy
Assessment Framework (TPAF), aimed at helping decision-makers assess
the various trade-offs of tax policy. TPAF will take the shape of a
publically available website compiling IMF and World Bank ‘canon’ on
different types of taxes in one place, and will include equity
considerations for the assessment of every type of tax. Given that a
World Bank Independent Evaluation Group February report found the
Bank’s approach to tax lacked an equity focus (see Observer Autumn
2017), and that recent reports have found the Fund lacks recognition
of the gender and equality impacts of its tax policy advice, the
equity components will be particularly scrutinised by civil society
critical of the BWIs’ approach to inequality. Its first chapter will
focus on VAT and will be publically piloted by the end of the year,
at which time it will be open to civil society feedback.

Hosting the first global conference on tax and the SDGs
---------------------------------------------------------------------
Finally, the PCT is organising its first global conference in
February 2018 under the banner Taxation and the Sustainable
Development Goals (SDGs) to “take forward the global dialogue on the
role of tax in achieving the SDGs among senior policy makers and tax
administrators” and inform the future work of the PCT. Civil society
is expected to call attention to, among other issues, the lack of
recognition of gendered tax impacts and, likely re-energised by the
revelations of the Paradise Papers, the growing global consensus on
the need for a UN Global Tax Body.

Remaining concerns about IMF’s influence
---------------------------------------------------------------------
While these initiatives seem to be tentatively welcomed by some as
steps in the right direction, the PCT has a track-record of promoting
the agenda of OECD countries over the interests of developing
countries (see Observer Autumn 2016). This begs the question of
whether these initiatives signify hope for tax justice or whether
they are a way for the IMF in particular to gain dominance in
international tax discourse. As Cobham points out, “One thing that
hasn’t changed at all is the sense that people in Washington
institutions are ultimately best placed to say what policy positions
are best. So while it’s welcome that the policy positions they’re
taking may be improving, we as civil society shouldn’t lose sight of
the fact that tax policy is highly political – policy choices must
reflect public preferences. So policy decisions cannot be delegated
to a technical elite from the other side of the world or anywhere
else.”

tinyurl.com/taxinitiatives

=====================================================================
ENVIRONMENT/news

Shared prosperity? WBG fails to progress on energy access for poor

Summary
-Only 13 per cent of World Bank’s energy investments go to improving
access
-CSOs urge Bank to prioritise clean energy access over investments in
fossil fuels
-Incoherence between Bank’s PPPs push and achieving universal energy
access

A civil society report released in late October criticised the World
Bank for its failure to commit more resources to energy access,
arguing that its approach to energy investment does not do enough to
end energy poverty in developing regions.

The report, Funding Clean Energy Access for the Poor: Can the World
Bank Meet the Challenge?, co-published by Bank Information Center
Europe (BIC Europe), the Swedish Society for Nature Conservation
(SSNC), and the Big Shift Global campaign, pointed out that lending
linked to improving energy access accounted for only 13 per cent
($1.5 billion) of the Bank’s energy lending portfolio in fiscal year
(FY) 2016. It called for the Bank to introduce specific targets to
scale up investments in energy access, including at least $5.75
billion in annual funding for energy access and investments that
enable 15 million people to gain connections annually.

The World Bank’s 2013 Energy Directions paper outlined that its,
“energy practice will be centered on contributing to the achievement
of … the UN Sustainable Energy for All initiative [SEforAll]”, which
includes the ambitious target of achieving universal energy access
worldwide by 2030. The target is also included in the Sustainable
Development Goals (SDGs) under SDG7, which is aimed at providing
access to affordable, sustainable, and reliable energy for all.
However, the Funding Clean Energy Access for the Poor report argued
the Bank needs to take additional steps to prioritise energy access
over investments in energy for export, particularly in energy poor
countries in Sub-Saharan Africa and Asia, in order to help reach
SEforAll goals.

Investment in distributed renewable energy vital to meeting SEforAll
target
---------------------------------------------------------------------
An October report by the International Energy Agency (IEA), a Paris-
based intergovernmental organisation, has shown that investment in
distributed renewable energy technology, including off-grid and mini-
grid electricity in remote rural areas of developing countries, is
essential for meeting SEforAll’s goal of achieving universal energy
access. It documented that 1.1 billion people worldwide remained
without electricity access in 2016, and that under current trends
this number will decline to 700 million by 2030 – with 60 per cent of
this improvement in access projected to be covered by renewable
energy. To reach universal access by 2030, the IEA report suggested
that 90 per cent of the remaining 700 million connections would need
to be provided by renewable technology, with off-grid and mini-grid
technology playing a key role in energy poor countries with limited
conventional grids.

The Bank’s investments in off-grid and mini-grid technologies have
historically been a peripheral area of its energy policy. For
example, a 2016 report from the World Bank Group’s (WBG) Independent
Evaluation Group (IEG) noted that between FY 2000-2016 WBG investment
in off-grid electrification was estimated to be only about 2.5 per
cent of its overall lending in the electricity sector (averaging $87
million a year). The IEG report noted: “No discernible trend is found
in these commitments” over the period included in the review.

While the Bank’s support for a number of recent clean energy projects
is encouraging, there are serious questions about whether the Bank’s
wider push to mobilise private sector finance for development (see
Observer Summer 2017) is compatible with achieving universal energy
access. For example, the Funding Clean Energy Access for the Poor
report pointed to the profound disconnect between the Bank’s approach
to achieving universal energy access targets and its agenda of
promoting public-private partnerships (PPPs), as a means of
maximising finance for development: “it is not clear that large-scale
PPP projects in the energy sector are well suited to address energy
access because the World Bank has not provided any guidance on how to
align the private sector objectives, i.e., aimed at profits, with
government objectives to provide energy access to the poor.”

Anna Östergren of SSNC commented: “When it comes to electricity for
the poor, for the World Bank it is not a lack of funding but a matter
of getting the priorities right. The World Bank needs to ensure
electricity for the poor is put ahead of using scarce public funds to
support fossil fuel exports.”

tinyurl.com/WBGaccess

=====================================================================
ENVIRONMENT/news

CSOs call on World Bank to prioritise forests in climate action

Summary
-CSO letter calls on WBG to prioritise forests and forest peoples’
rights
-Letter urges Bank to open countries’ Forest Notes up to consultation
-Bank urged to avoid funding direct and indirect causes of
deforestation

A November letter from 77 civil society organisations (CSOs)
worldwide, including Derecho, Ambiente y Recursos Naturales (DAR)
from Peru and Buliisa Initiative for Rural Development Organisation
(BIRUDO) from Uganda, called on the World Bank Group (WBG) to “fulfil
its commitment to prioritise forests and forest peoples’ rights in
its support to borrowing countries and the implementation of their
nationally determined contributions (NDCs)” to the Paris Climate
Agreement.

The letter, addressed to World Bank president Jim Kim, coincided with
the UN Framework Convention on Climate Change’s (UNFCCC) Conference
of Parties 23 (COP 23) in Bonn. It called on the WBG to prioritise
forests and indigenous peoples’ rights in World Bank Country Policy
Frameworks. The letter further called on the Bank to strengthen
safeguards to protect forests and indigenous peoples’ rights,
including for Development Policy Loans (DPLs) (see Observer Spring
2017) – which are not subject to the Bank’s new Environmental and
Social Framework (ESF). It also argued that the Bank should take
steps to avoid funding direct and indirect causes of deforestation,
including through investments via financial intermediaries (see
Observer Winter 2017).

The CSO letter also urged the Bank to make its Forest Notes – which
are currently under development – open to stakeholder consultation.
The Notes were introduced as part of the Bank’s 2016-2020 Forest
Action Plan (FAP), and are meant to guide national policy on forests.
As then-WBG Global Forest Lead Carole Megevand explained in a 2016
blog, the Notes will, “provide data on the role of forests in
alleviating poverty, creating jobs, and mitigating and adapting to
climate change. This will inform strategic country diagnostics and
help shape our country partnership frameworks that guide our
projects.” However, Petra Kjell, from watchdog CSO Bank Information
Center, commented that the “Forest Notes were introduced to present
in country analysis the threats and opportunities for forests, which
should feed into the World Bank’s country strategies. This commitment
was reinforced in the IDA 18 [International Development Association’s
18th Replenishment] process, but so far the Forest Notes remain
closed for stakeholder engagement - a lost opportunity for genuine
solutions for forests and forest peoples’ rights.”

As climate change bites, Bank urged to up its game on forests
---------------------------------------------------------------------
The link between deforestation and climate change is well-documented:
As Frances Seymour of the Center for Global Development noted in an
August blog, “If tropical deforestation were a country, it would rank
third after China and the United States as a source of emissions.”
However, tackling deforestation is a relatively low institutional
priority for the Bank, with small lending volumes in comparison to
other areas of Bank finance and WBG country teams often lacking
specific forest expertise (see Observer Winter 2016).

The Bank’s lending through Development Policy Loans has also led to
deforestation, according to CSOs. For example, Harlem Mariño from DAR
emphasised the effect of the Bank’s DPL lending on forests in South
American countries like Peru: “The main problem we found by analyzing
the latest Development Policy Loans for Peru is the seemingly little
willingness shown by the Bank to develop an adequate monitoring
system to assess the social and environmental risks of their
different loan operations. The evidence of this are the laws approved
as prior actions [required by the Bank’s DPL lending] in Peru to
promote investments by reducing the Government’s capacity to sanction
environmental infractions caused by the extractive industry,
especially those based in the Amazon rainforest.”

Meanwhile, one of the forest initiatives the Bank manages, the Forest
Carbon Partnership Facility (FCPF), a climate investment fund that
supports Reducing Emissions from Deforestation and Forest Degradation
(REDD) projects, received stinging criticism in March in an article
published by the REDD-Monitor. The piece called the FCPF, “The most
cost-inefficient tree-saving scheme ever,” owing to high
administrative costs between fiscal years 2009-2015 absorbing 64 per
cent of FCFP’s $55 million expenditure. Subsequently, in August, the
Rainforest Foundation UK (RFUK) and US (RFUS) raised concerns in an
exchange with the World Bank about full prior and informed consent
(FPIC) being achieved among communities affected by a proposed FCPF-
supported REDD project in the Democratic Republic of Congo’s Mai
Ndombe province. A RFUK briefing published in August found that the
Mai Ndombe project’s, “safeguard plans as they currently stand are
seriously flawed, [are] inadequate to ensure proper protection
against harm, and need substantial re-working, clarification and
improvement.”

Despite such shortcomings, as the Bank remains the biggest
multilateral source of finance for forests, it has a potentially
important role to play in initiating meaningful policy change in this
area. Events at COP23 itself offered some positive developments in
terms of the need to consult with indigenous peoples as part of the
broader NDC process. While the 2015 Paris Agreement recognised the
contribution of indigenous knowledge in dealing with climate change,
COP23 built on this, arguing that countries, “should, when taking
action to address climate change, respect, promote and consider their
respective obligations on the rights of indigenous peoples and local
communities.” CSOs are hopeful the Bank will heed this language in
its own forests policy.

tinyurl.com/WBGforests

=====================================================================
PRIVATE SECTOR/news

CSOs call on World Bank to halt its aggressive support of PPPs

In October, ahead of the World Bank and IMF annual meetings in
Washington DC, 152 civil society organisations (CSOs), including
Rivers Without Borders Mongolia and Colombia’s Consejo Laboral
Afrocolombiano, launched the Public-Private Partnership (PPP) Global
Campaign Manifesto. The manifesto outlined the signatories’ serious
concerns with PPPs generally and the World Bank’s presentation of
PPPs as a panacea for the world’s social and economic infrastructure
financing gap. The manifesto demanded that the Bank, IMF and other
multilateral development banks (MDBs), “halt the aggressive promotion
and incentivising of PPPs for social and economic infrastructure and
publicly recognise the financial and other significant risks that
PPPs entail.” The manifesto also urged “all those concerned with
justice, equality, sustainability and human rights to resist the
encroachment of PPPs and push … for high-quality, publicly-funded,
democratically controlled, accountable public services.”

As detailed in Brussels-based CSO Eurodad’s October report, Defusing
the ticking time bomb, the manifesto was developed in the context of
a strong MDB push for PPPs despite their potential serious negative
consequences, such as their higher costs compared to projects
financed through public borrowing, their impact on equitable access
to public services, and fiscal impact through the creation of hidden
contingent liabilities (see Observer Autumn 2015). As noted by
Heinrich Böll Foundation’s Nancy Alexander in her blog Beware the
Cascade, PPPs form an important pillar of the Bank’s new cascade
strategy to de-risk private sector investments in order to support
the MDB’s ‘billions to trillions’ aspirations (see Observer Autumn
2017, Summer 2017).

tinyurl.com/PPPmanifesto

=====================================================================
ACCOUNTABILITY/news

IFC to revisit its development outcomes framework

In an October blog published ahead of the World Bank and IMF annual
meetings in Washington DC, Philippe Le Houérou, CEO of the
International Finance Corporation (IFC), the World Bank’s private
sector arm, noted that the IFC has developed “a new framework —
Anticipated Impact Measurement and Monitoring, or AIMM — to enable us
to better define, measure and articulate the development impact of
each project.” AIMM will eventually allow the IFC to “judge and
communicate our results not only from an operational and financial
perspective but also from a development and portfolio perspective.”
While details about timelines and the degree to which outside
expertise will inform AIMM are not available, the IFC will convene a
meeting with civil society organisations in London on 7 December to
discuss the process.

The IFC’s discovery that as a development institution, it should
“eventually” be able to judge its results “not only from a financial
perspective” but also “a development perspective” seems a step in the
right direction. As outlined in a January 2016 Mother Jones magazine
article, titled The World Bank Is Supposed to Help the Poor. So Why
Is it Bankrolling Oligarchs?, the IFC’s investment choices and their
supposed linkages with its development mandate have been heavily
criticised (see Update 84). Additionally, the heavy caseload of its
accountability mechanism, the Compliance Advisor Ombudsman (CAO), and
persistent recent reports of the negative consequences resulting from
the IFC’s inability to ensure its investments through financial
intermediaries do no harm, underscore the need for structural changes
within the institution (see page 7 of this issue, Observer Spring
2017, Autumn 2016). Given the importance of the process, civil
society is hopeful that the meeting in London will mark the beginning
of a formal process of consultation with a wide array of stakeholders
on the development of AIMM.

tinyurl.com/IFCdevoutcomes

=====================================================================
RIGHTS/news

Long-awaited ESF Guidance Notes fail to meet CSO expectations

After waiting nearly 15 months for the release of the World Bank’s
draft Guidance Notes for Borrowers, civil society organisations
(CSOs) reacted with disappointment in a December letter signed by 29
CSOs, including Inclusive Development International and the Egyptian
Initiative for Personal Rights, to what many felt were documents
unfit for purpose.

The Guidance Notes (GNs) are meant to facilitate the implementation
of the Bank’s Environmental and Social Framework (ESF) safeguards for
development project lending approved in August 2016, by providing
borrowers with tools across the ten core ESF standards. The notes
were released for public comment on 2 November, with a closing date
for comments of 15 December.

The joint letter, sent to Manuela Ferro, the World Bank Group’s vice
president of operations policy and country services, underlined civil
society’s dissatisfaction with the draft notes, expressing “deep
concerns.” It noted that, “Throughout the safeguards review process,
civil society … [was] assured that the Guidance Notes would reflect
pressing questions and concerns about the ESF.” It went on, “While a
small number of the draft Notes refer to resources and
recommendations on certain issues, we feel the great majority of the
objectives for the Notes are not achieved in these drafts.”

Despite the GNs being a vital feature of the Bank’s newfound ESF –
which will increasingly rely on borrower systems (see Observer Autumn
2016) – they are not policy, and thus do not have to be approved by
the World Bank’s board. It is unclear the extent to which feedback
received during the current public comment phase will be integrated
into the final versions of the notes  – which are due for release in
early 2018 – as the Bank has previously declined to make them
available for a full public consultation.

tinyurl.com/ESFguidance

=====================================================================
RIGHTS/news

CSOs express concern about IMF’s “strongly divergent” social
protection approach

In October, the Global Coalition for Social Protection Floors, a
network of over 90 civil society organisations (CSOs) and trade
unions, submitted a letter to the IMF’s managing director, Christine
Lagarde, and its executive board. Following a July report from the
IMF’s Independent Evaluation Office on the IMF and social protection
(see Observer Autumn 2017), the letter expressed concern with the
report’s findings that the Fund’s approach contradicts the
internationally-agreed objective of universal, rights-based social
protection laid-out by Recommendation 202 of the International Labor
Organization (ILO) and enshrined in the Sustainable Development
Goals. In doing so, the letter argued, the IMF “diverges strongly”
from the internationally-agreed agenda on social protection. The
letter therefore called on the IMF to, inter alia, change its current
policy approach, coordinate much more with the ILO, and actively seek
the participation of CSOs and trade unions at country level.

The IMF’s divergence from international standards was further
highlighted by a November paper by UK-based NGO Development Pathways.
The paper contrasted the ‘citizenship paradigm’, which emanates from
an understanding that social security is a right for all, with the
‘charity paradigm’, which conceptualises social protection as
handouts to ‘the poor’. The paper called on the IMF to reconsider its
‘charity-based’ approach to social protection and address the harm
this is inflicting around the world (see BWP At Issue February 2017).

Evelyn Astor from the International Trade Union Confederation
commented that, “adequate, universally-accessible social protection
is a fundamental human right, an essential component of decent work
and a key ingredient for sustainable economic development. The IMF
nevertheless continues to push for scaling back social protection due
to short-sighted cost concerns – an approach that needs to be
thoroughly reconsidered.”

tinyurl.com/spcsoletter

=====================================================================
ENVIRONMENT/news

Landmark climate-change complaint against IFC lodged in Philippines

An official complaint filed in October against the private sector arm
of the World Bank, the International Finance Corporation (IFC), has
made history as it became the first ever climate change-related
complaint submitted to the IFC’s independent accountability
mechanism, the Compliance Advisor Ombudsman (CAO). On behalf of
affected communities and civil society organisations, the Philippine
Movement for Climate Justice (PMCJ), through its complaint to the
CAO, accused the IFC of “contributing to the crisis of global climate
change and causing other serious environmental and social harm”. The
accusation is based on the IFC funding 19 coal power plants across
the Philippines and companies that operate them through a financial
intermediary (FI) and local bank, Rizal Commercial Banking
Corporation (RCBC).

The complaint additionally claimed that despite failing to meet the
IFC’s social and environmental Performance Standards and climate
commitments, RCBC was given $253 million by the IFC to invest in
projects that were considered to have “significant adverse
environmental and social risks that are diverse, irreversible or
unprecedented”.

This is not the first time that the IFC has been called out for its
inability to monitor its FI investments. Civil society groups have
previously highlighted how IFC funding has continued to support
fossil fuel-related projects over the past decade and a half, such as
those in Indonesia and India, in contravention of its social and
environmental responsibilities and World Bank policy (see Observer
Summer 2017, Winter 2017, Bulletin Dec 2013). The complaint provided
additional evidence to support civil society calls for the IFC to
ensure its investments in FIs do no harm to local communities or the
environment (see Observer Spring 2017).

tinyurl.com/landmarkIFCcase

=====================================================================
ENVIRONMENT/news

COP 23 puts Bank-backed climate insurance in spotlight

November’s UN Framework Convention on Climate Change (UNFCCC)
Conference of Parties (COP) 23 in Bonn ended without agreement on
financing Loss and Damage (L&D) for developing countries already
experiencing the impacts of climate change. In the absence of clarity
on the issue, the role of climate insurance – an instrument widely
promoted by the World Bank – in mitigating L&D is increasingly
emerging as the default option, despite the fact that it is unable to
address many climate-change related impacts (see Observer Autumn
2017).

Two new initiatives were launched at COP 23 with a heavy climate
insurance focus: The G20-backed InsuResilience Global Partnership –
which will rely on the Bank’s technical assistance, and will seek to
provide ‘access’ to climate insurance for 400 million people in
developing counties by 2020 – and the UNFCCC Clearing House on Global
Risk – which highlights existing Bank, and other, climate insurance
initiatives for potential developing country clients. Harjeet Singh
of ActionAid International responded in a statement: “Insurance might
turn out to be a piece of the puzzle, but we can’t pretend that it’s
a safety net for everyone. Insurance does sometimes help people who
are impacted by floods or cyclones. But it won’t be an option for
those facing certain losses.”

Questions also remain about who will fund premium financing for
climate insurance schemes, which range from state-level ‘sovereign’
policies, to micro-insurance for farmers and property owners in
developing countries. As summed up by Singh: “Will poor people in
vulnerable countries, who have done nothing to cause the climate
crisis and who bear the brunt of its impact, need to pay for climate
insurance?”

tinyurl.com/COP23cinsurance

=====================================================================
CONDITIONALITY/background

New IMF conditionality database launched

A team of UK-based academics launched a new website in September,
compiling the first freely available, comprehensive and transparent
database of IMF conditionality, or mandated policy reforms. The
database systematises the 58,406 conditions applicable to IMF
programmes between 1980 and 2014. The data were extracted from
countries’ loan agreements with the IMF and enable nuanced
examinations of the economic, social and political determinants and
implications of IMF conditionality.

The team plans to continue working to expand the database and make it
more accessible over the next few years. Thomas Stubbs of Royal
Holloway, University of London, one of the researchers behind the
database, explained, “We sought to lower the informational barrier
for civil society, policymakers and the public vis-à-vis the outputs
of the IMF. Information about the content of conditionality had been
largely inaccessible, impeding attempts to hold this controversial
organisation to account.”

IMFmonitor.org

=====================================================================
HUMOUR/commentary

Bank and Fun(d)speak of the year 2017

Every year, the Bretton Woods Project highlights some of the most
farcical remarks of IMF and World Bank staff.

This year saw the ignominious birth of possibly the world’s most
ephemeral yet brilliantly, if subconsciously, named development
concept, the Cascade (see Observer Summer 2017). We haven’t seen a
water-based metaphor this exciting since trickle-down economics. As
the name implies, the Cascade promised the world’s poor a thrilling,
if hazardous, ride on the watery roller coaster of private-sector led
development goodness. Business leaders watching the Cascade’s magical
ability to quickly and artistically erode their business risks and
raise their profit margins in an uncertain, growth-constrained world
will no doubt enjoy the Cascade’s majestic beauty, power and just
plain profit-making fun. Alas, the policy that sounds like a
compulsory and costly public-private partnership water theme-park
ride that has made waves throughout the year was renamed, much to the
chagrin of our illustrator, to the adequately boring and innocuous-
sounding ‘Maximising Finance for Development’.

In keeping with the Bank’s focus on hydropower, World Bank president
Jim Kim capitalised on Chinese president Xi Jinping’s use of an ocean
metaphor, which noted that “we must have the courage to keep swimming
in the global market,” in Davos in January, to fabricate his own more
expansive watery metaphor. Responding to a question about the
potential contradictions between capitalism and the Bank’s core
mission at this year’s annual meetings town hall with civil society
(apparently no one vets the pesky members of Kim’s former tribe of
revolutionaries prior to the event), Kim dismissively noted that “the
global system is the ocean that none of us can escape from”. Could
the ocean metaphor be a cleverly veiled reference to the saline tears
of the exploited proletariat, as Kim pondered the lessons resulting
from “having read up one side of Marx and down the other”? Given the
Bank’s focus on leveraging billions to trillions through private
sector investment, a la the Cascade, one could not but escape the
mental image of Bank technocrats and their private sector ‘cruise
companions’ happily enjoying the ride in the smooth seas of
capitalism while those less fortunate swim furiously to stay afloat.
Perhaps Kim’s efforts to curry favour with Ivanka Trump through the
establishment of We-Fi (see Observer Autumn 2017) was meant as a
virtual ‘swimming lesson’ to those who have not bothered to teach
themselves to swim.

As we would be remiss to ignore the Fund’s managing director,
Christine Lagarde, we took note of her transition from master chef
(see Observer Bankspeak 2016) to master builder. Perhaps channelling
Ivanka’s efforts at “architecting the life she wants to live”,
Lagarde made repeated calls to “repair the roof” when the sun is
shining, during good economic times. These building references seem
to ingeniously reflect a focus on the sustainability of the IMF’s
existence, as IMF austerity policies and conditionality often prevent
countries from building resilient roofs. The Fund subsequently comes
to the rescue to direct their shoddy reconstruction once damaged.
Pondering her institution’s contribution to architecting a brave new
world, Lagarde mused during an enigmatic speech about Fintech
(evidently the long-awaited answer to our global problems – look mum,
no more rainy days), “For many, this new world of central banking is
less Mary Poppins, and more Aldous Huxley: a Brave New World, much
like the one described in Huxley’s famous novel … I prefer
Shakespeare’s evocation of the brave new world in The Tempest: ‘O
wonder! How many goodly creatures are there here! How beauteous
mankind is! O brave new world.’”

tinyurl.com/Bankspeak17

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