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Bretton Woods Observer Spring 2020
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


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1. COVID-19 crisis highlights urgency of reconsidering World Bank’s
MFD approach (FINANCE/analysis)
2. Long-awaited accountability reforms announced by World Bank board
(ACCOUNTABILITY/news)
3. World Bank must support rigorous independent monitoring of
discrimination against girls in Tanzania (RIGHTS/commentary)
4. World Bank pandemic bond instrument fails in COVID-19 response
(FINANCE/news)
5. Myanmar deemed rising Doing Business star, but at what cost?
(PRIVATE SECTOR/News)
6. Ghana’s Sankofa gas project – backed by World Bank – brings fiscal
pain (INFRASTRUCTURE/anaysis)
7. Senior-level staff changes at World Bank and IMF (IFI GOVERNANCE/
news)
8. UN holds Pakistan to account for IMF programme impacts on women
(GENDER/news)
9. World Bank and IMF response to debt crisis undermines women’s
rights
by Iolanda Fresnillo, Eurodad and Verónica Serafini, Latindadd
(GENDER/analysis)
10. World Bank board silent on Guatemala dam investigation review
after February meeting (ACCOUNTABILITY/news)
11. Civil society launches framework to assess human rights impact of
health privatisation (RIGHTS/news)

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FINANCE/analysis

COVID-19 crisis highlights urgency of reconsidering World Bank’s MFD
approach

Summary
- World Bank contributes to instability triggered by COVID-19 by
pushing MFD
- Expansion of MFD takes place despite lack of evidence of
development impact
- World Bank continues to ignore other available policy options

The global economy is on the verge of an event of similar to or of
greater proportion than the 2008 financial crisis, as Eric Toussaint
of the Committee for the Abolition of Illegitimate Debt (CADTM) noted
in a March article on the CADTM website. He stressed, however, that,
while triggered by the COVID-19 pandemic, the evolving crisis’s
origins are rooted in rising inequality, the increasing power of
finance and other related dangerous distortions. The World Bank’s
Maximising Finance for Development (MFD) approach (see Observer
Summer 2017), founded on privatisation and financialisation, is both
a reflection of and a contributor to the underlying dynamics of the
current instability. Supporting Toussaint’s argument, the 2019 UN
World Economic Situation and Prospects report noted that global
economic growth was at, “the lowest rate since the global financial
crisis of 2008-2009,” adding, “The world economy is plagued by risks
that threaten financial stability.” As UK-based civil society
organisation (CSO) Jubilee Debt Campaign’s March call for a
moratorium on debt payments for poor countries most affected by
COVID-19 and for the cancellation of their debt to the IMF stressed,
these will be hardest hit by the crisis. The link between the unequal
impacts of the COVID-19 crisis and preceding trends can be seen in a
March 2018 Development and Change journal article by Pablo G. Bortz
and Annina Kaltenbrunner. It stressed that financialisation – which
underpins MFD – has exacerbated “the subordinated position of DEEs
[developing and emerging economies] in the international economic and
financial system and…contributed to uneven international
development.” In light of these concerns and the IMF’s January
research demonstrating that, after a certain point, the size of the
financial sector contributes to inequality and thus to financial
instability, questions about the consequences of the proposed
reliance on leveraging private finance to fund the Sustainable
Development Goals (SDGs) are paramount.
Expanding implementation of MFD
The MFD agenda is premised on enticing trillions of ‘idle’ private
sector dollars to invest, and profit from, activities with positive
development outcomes. This is to be done through a series of de-
risking activities and instruments, including privatisation, the
creation of new asset classes through public-private partnerships
(PPPs) (see Observer Summer 2018), guarantees, and the creation of
business friendly environments along the lines of the Bank’s much-
criticised Doing Business Report (see Observer Winter 2018).
According to Daniela Gabor of the University of the West of England
Bristol, MFD represents an effort to implement the ‘Wall Street
Consensus’ by “reorient[ing] financial systems towards market-based
finance and to forge the de-risking state,” where the state and the
public assume the risks of private sector investments through
guarantees and other subsidies.
While MFD is officially being ‘piloted’ in nine countries, its
implementation is diffuse within the World Bank and has been widely
adopted by the international community more broadly through the
Agenda 2030. Jomo Kwame Sundaram and Anis Chowdhury, for instance,
noted in a March 2019 Inter Press Service article that the World
Bank, “has successfully legitimized the notion that private finance
is the solution to pressing development and welfare concerns.” Given
the Bank’s long-held belief in the superiority of market solutions,
MFD’s emphasis on creating markets is better understood as an
evolving and more programmatic encapsulation of an existing model
(see Observer Winter 2018; Update 81). This approach is being
increasingly integrated into country-level planning, with the World
Bank noting it, “has diagnostic tools to support MFD…[including] the
Country Private Sector Diagnostic (CPSD), which takes an investor
perspective in reviewing all economic sectors to identify
opportunities for action to spur private sector-led growth.”
Ignoring risks
The negative impact of key elements of MFD are well documented (see
Observer Winter 2019, Autumn 2019, Spring 2017).  A 2018 civil
society report demonstrated that in the case of PPPs, another key
element of MFD, it is invariably the state – rather than private
investors – that typically underwrites the risk under PPP
arrangements (see Observer Summer 2018). The negative and gendered
impacts of the World Bank’s development policy lending have also been
extensively detailed (see Briefing The World Bank and gender equality
Development Policy Financing). A 2018 open letter signed by over 110
academics detailed MFD’s many structural flaws, stressing that its
promotion of shadow banking to create investable opportunities in
essential services such as water, health and infrastructure can have
long-term negative consequences for equity in service provision.
While not formally categorised as an MFD project, the perils of MFD’s
reliance on enticing private investment, and particularly foreign
direct investment at any cost, are made clear in a February report by
the Netherlands-based CSO, SOMO, on Mongolia’s Oyu Tolgoi copper
mine. The report stressed that with support from the World Bank and
IMF, in 2009, “Mongolia signed an Investment Agreement for the Oyu
Tolgoi Project that privileges ‘western’ corporate interests by
offering generous corporate oriented incentives that do not fill
public coffers.”
Exaggerating benefits, overlooking alternatives
Despite MFD’s claims to effectively use public funds to leverage
private sector investment for development outcomes, recent research
has demonstrated that its promises are exaggerated. An April 2019
report from UK-based think tank, the Overseas Development Institute,
noted that blended finance is unlikely to meet the SDGs financing gap
and, “risks undermining the poverty eradication agenda in the poorest
countries.” UK-based CSO Stamp Out Poverty’s report in April 2019
similarly questioned lofty projections of the ability of public money
to leverage private sector finance for development and noted that,
“The false promise may detract…from other useful policy measures,
such as focusing more efforts on mobilising domestic tax revenues or
fighting tax avoidance instead.
Within that context, many have argued that more egalitarian financing
alternatives with fewer risks are available. The 2017 ILO, UN Women
and UNICEF report on fiscal space for social protection, for example,
provides eight options to expand fiscal space to finance the SDGs.
UK-based CSO Christian Aid’s 2019 Trapped in Illicit Finance report
stressed that, “Governments are constrained in their resources
because they tolerate widespread tax evasion and avoidance…This
report estimates that public revenue losses from IFFs [illicit
financial flows] amount to around $416bn every year.”
Concerns about MFD therefore go beyond its exaggerated claims to
contribute to development outcomes and are centred on the fact that
it is a new and possibly more dangerous incarnation of pre-existing
and widely-criticised policies. Patrick Bond from the University of
the Western Cape, traces the Bank and Fund’s current approaches to
their promotion of Washington Consensus policies after the 1980s debt
crisis (see Briefing Bretton Woods at 75, A series of critical
essays). As noted above and outlined in the 2017 UNCTAD World Trade
Report, the financialisation inherent in MFD has already had
significant and long-term consequences, contributing to inequality,
financial instability and perpetuation of the subordinated position
of the Global South in the world economy. These are precisely the
underlying conditions that make the evolving global economic crisis
triggered by COVID-19 significantly worse. In light of the
considerable risks, it is imperative that the Bank ceases its push
for MFD and instead focuses on strengthening state capacity to meet
equitable and ecologically sustainable development objectives through
well-documented policy alternatives.
bit.ly/MFD_COVID

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In this issue

- World Bank must support rigorous independent monitoring of
discrimination against girls in Tanzania by Maria Sarungi Tsehai
- World Bank pandemic bond instrument fails in COVID-19 response
- Ghana’s Sankofa gas project – backed by World Bank – brings fiscal
pain
- World Bank and IMF response to debt crisis undermines women’s
rights by Iolanda Fresnillo and Verónica Serafini

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ACOUNTABILITY/news

Long-awaited accountability reforms announced by World Bank board

On 9 March, the World Bank board approved a package of reforms for
the Inspection Panel (IPN), its independent accountability mechanism
(IAM), concluding a lengthy review process that began in 2017.
The package includes measures for the IPN to be given an independent
dispute resolution function, powers to monitor management action
plans and an extension of the timeline for affected communities to
file complaints. These reforms reflect long-standing civil society
calls for the World Bank to raise accountability standards in line
with the IAMs of other development finance institutions
(see Observer Winter 2018). The package also includes the creation of
an accountability office, called the World Bank Accountability
Mechanism, which will include the IPN and the new dispute resolution
office.
The board’s decision in March, which was initially expected in
October last year, followed a two-year deadlock between board members
over proposed reforms (see Observer Winter 2019).
Civil society organisations issued a joint statement in response in
March, stating that they “cautiously welcome” the reform package, but
stressed that its effectiveness remained dependent on the World
Bank’s “commitment to ensuring the independence of the new
Accountability Mechanism.”
bit.ly/IPN-reforms

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RIGHTS/commentary

World Bank must support rigorous independent monitoring of
discrimination against girls in Tanzania
by Maria Sarungi Tsehai, Change Tanzania

Summary:
- Board approves $500 million Tanzania education loan
- Civil society remains concerned about grave human rights violations

On 31 March, the World Bank board approved a $500 million loan for
Tanzania’s Secondary Education Quality Improvement Program (SEQUIP),
following a year and a half of controversy over fears the loan would
consolidate and institutionalise an education system that actively
violates the human rights of schoolgirls. While the Bank made
important commitments to ensure its financing does not actively
support discrimination, rigorous monitoring will be required to
ensure that pregnant schoolgirls’ fundamental right to equal access
to a quality education is fulfilled.
In 2017, Tanzania’s president, John Magufuli, declared that pregnant
schoolgirls should be permanently expelled from school. This order
came on the heels of a well-documented pattern of human rights abuses
that has threatened independent civil society voices and many of the
most vulnerable groups in the country. In response, the Bank
suspended all lending to Tanzania in November 2018, including the
$300 million SEQUIP project focused on secondary education, and
agreed to release the loan only once the government allowed pregnant
schoolgirls back to school after they have given birth. Rather than
address the expulsion of schoolgirls directly, the Bank proposed to
expand existing adult education centres, renamed “Alternative
Education Pathways”, and inflated the loan amount to $500 million.
The revamped SEQUIP project did not reflect the opinions of
Tanzanians about pregnancy and school. Tanzanians’ primary complaint
was that the “Alternative Education Pathways” proposed by the Bank
created and legitimised a second-class education system that was
separate and unequal. While the Bank claimed that girls could re-
enter regular school in Form 4 or 6, less than 10 per cent of these
students ever go on to complete these higher levels of school, making
the path to re-entry very narrow indeed.
Over 10,000 citizens – mostly from Tanzania and other sub- Saharan
African countries, signed a petition demanding that the World Bank
board withhold its support until the ban on pregnant schoolgirls is
lifted. In addition, a group of civil society members, who chose to
remain anonymous for fear of reprisals, wrote multiple letters to the
Bank board asking for further postponement to reflect on concerns.
Meanwhile, reports on forced pregnancy testing of schoolgirls
continued to emerge. Forced testing, which is far too common in
Tanzania, is the inevitable consequence of a government policy of
expulsion. Even while the Bank’s board was weighing up project
approval earlier this year, headteachers and educational officers in
the Dodoma district were instructed to regularly perform pregnancy
tests of girls in all primary and secondary schools. In most cases,
these are physically intrusive tests that effectively amount to
sexual assault.
After being delayed twice, the board finally approved the revamped
project, despite the United States voicing its concern and voting
“no”.
The good news
Most strikingly, in its press release on the approved loan, the Bank
claims that “there is no government policy that states that students
who become pregnant must be expelled from public schools.” Until now,
girls have been expelled under the government’s 2002 education
regulation no. 295, called “Expulsion and Exclusion of Pupils from
Schools,” using Rule 4(b) and (c) that allows expulsion for “an
offence against morality”. The new arrangement with the Bank seems to
indicate that the government agreed it will no longer expel pregnant
girls based on this regulation. Civil society can use this to its
advantage by actively monitoring expulsions and reporting them to the
Bank. Another important victory has been a government guarantee to
the Bank that the practice of compulsory and involuntary pregnancy
testing is not part of any official policy and a commitment to halt
the practice.
The bad news
The Bank’s documents refer to the programme as a method to support
so-called “drop-outs”, not expelled girls. We therefore remain
cautious about whether the government will actively work to end
expulsions and whether the World Bank will actually act upon
receiving reports that girls are still being denied schooling. Also,
what seems to be clearly missing in the agreement is an assurance on
independent monitoring mechanisms, protected by the Bank, that could
ensure that SEQUIP activities are delivered without discrimination.
Without these mechanisms, there would be no way for the Bank to get
reliable information about the performance of the loan in the
severely restricted civic space of Tanzania.
Finally, the Bank has a duty, under its Environmental and Social
Framework (ESF), to ensure that all its projects promote equality and
non-discrimination by improving access to services for all
traditionally marginalised and disadvantaged groups.
If the Bank’s financing is used to support institutions that
discriminate against pregnant schoolgirls, not only will it be in
violation of its own ESF, making an Inspection Panel case inevitable,
but the Bank will also be complicit in grave human rights abuses.
More needs to be done to ensure that pregnant schoolgirls are not
forced into “separate but unequal” “Alternative Education Pathways”.
bit.ly/TanzaniaSchools

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FINANCE/news

World Bank pandemic bond instrument fails in COVID-19 response

The ongoing coronavirus (COVID-19) outbreak is once again challenging
the effectiveness of the World Bank’s Pandemic Emergency Financing
Facility (PEF).
PEF, launched in 2017 after the 2014 Ebola outbreak in West Africa,
was touted as an innovative mechanism to potentially “save millions
of lives and entire economies,” by rapidly mobilising finance to low-
income countries facing pandemics and placing some risk onto
financial markets, rather than governments’ budgets.
However, PEF criteria have long been criticised for making the
mechanism slow and complicated. The facility, which relies on a
series of pay-out ‘triggers’, only releases funds once there have
already been a certain number of cases, deaths and countries affected
by an outbreak.
In an article in UK newspaper The Guardian, Bodo Ellmers, of US-based
civil society organisation (CSO) Global Policy Forum, noted, “The
scheme’s ‘fundamental flaw’ is that it was aimed at preventing a
pandemic but would only pay out when a pandemic was already
underway.” A clear example is the Democratic Republic of Congo,
where, a year after the second Ebola outbreak in 2018, funds were yet
to be released as the disease had not spread across international
borders, one of the requirements for PEF bonds to be triggered.
A 2017 paper by Clare Wenham of the London School of Economics
highlighted that, out of 60 pandemic cases studied, PEF would only
have been triggered on two occasions. Meanwhile, by mid-2019, it had
paid $114.5 million to private investors as coupons, suggesting that
it seems “to be serving private investor interests more than
contributing to global health security.” At time of writing, no
country has received PEF funds to prepare for the COVID-19 outbreak.
While the funds are likely to be triggered soon with the COVID-19
crisis evolving very rapidly, the delayed response has prevented PEF
from enhancing developing countries’ ability to respond to the
crisis.
This comes in the context of IMF-imposed fiscal consolidation and the
Bank’s use of public-private partnerships as one of the main policies
to expand healthcare privatisation – linked to cuts in social
spending and private sector involvement – weakening countries’ health
systems. These have eroded states’ capacity to react to health crises
such as COVID-19, as argued in a report produced by the Citizens for
Financial Justice project in 2019 (see Observer Autumn 2018, Spring
2017, Winter 2015).
On 3 March, the World Bank announced a package of up to $14 billion
to assist countries to immediately respond to the COVID-19 crisis.
The IMF also released a statement on 4 March, announcing that it “is
making available about $50 billion through its rapid-disbursing
emergency financing facilities for low income and emerging market
countries that could potentially seek support [in dealing with the
COVID-19 outbreak],” emphasising that the necessary “health spending
must occur regardless of how much room in the budget a country may
have.”
bit.ly/COVID-19PEF

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PRIVATE SECTOR/news

Myanmar deemed rising Doing Business star, but at what cost?

Myanmar, most recently in the news due to UN allegations of human
rights abuses against its minority Rohingya populaton and renewed
conflict in the Rhakine region, was deemed one of the top 20
performers in the World Bank’s 2020 Doing Business Report (DBR) (see
Observer Winter 2018; Inside the Institutions, World Bank’s Doing
Business report), moving to 165 from 171 of the 190 countries
analysed.
The DBR’s lack of contextual and conflict analysis is not only
worrying in the case of Myanmar. It seems at odds with the Bank’s new
Fragility, Conflict and Violence Strategy, which is particularly
concerning given the World Bank’s increasing emphasis on fragile
states (see Observer Autumn 2019).
As underscored in a February 2019 journal article by Jason Miklian
“[Myanmar’s] economic opening has exacerbated ethnic tensions”,
adding that gains from it, “have primarily benefited existing local
elites as most new investments require local partners who hold high-
level roles in Myanmar’s political-military nexus.” This must be seen
in light of the military’s alleged role in massive human rights
abuses, including the displacement of an estimated 800,000 Rohingya.
According to an October 2019 article in online Myanmar-based
newspaper The Irrawady, “The Myanmar government set the ambitious
goal of reaching the top 100 of the index for 2020,” highlighting
that it “aims to attract more than US$200 billion (305.7 trillion
kyats) in investment from businesses over the next 20 years.”
While some of the steps lauded in the DBR, such as improvements in
the water and sanitation infrastructure can hardly be criticised, the
focus on attracting foreign direct investment (FDI), including
through changes in the process by which state land is leased, are
potentially problematic. A March report by Netherlands-based civil
society organisation Recourse on the lack of transparency in
Myanmar’s public-private partnership Myingyan power plant provides a
cautionary tale.
The challenges created by the country’s focus on FDI, including those
linked to the principally Chinese-backed Belt and Road Initiative,
are cited in a February report by the United States Institute for
Peace. It highlighted that, “major infrastructure projects in Myanmar
are likely to occur in or adjacent to the country’s conflict areas”,
adding, “the presence of competing  armed forces, the lack of basic
infrastructure and connectivity with the rest of the country, and
large ungoverned areas…will provide fertile ground for development
projects to trigger unrest and violence.” As Christopher Cramer
argued in his 2006 book Civil War is Not a Stupid Thing, the
political economy of conflicts is complex and influenced by numerous
variables, including social economic relationships, all of which are
impacted by economic transformations inherent in policies advocated
by the Bank’s DBR.
bit.ly/MyanmarDBR

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INFRASTRUCTURE/analysis

Ghana’s Sankofa gas project – backed by World Bank – brings fiscal
pain

Summary
- Ghana left with $250 million bill for unused gas in 2019 due to
‘take or pay’ clause in PPP contract
- Ghana’s energy sector woes worsen debt outlook
- African civil society calls on African Union leaders to “put an end
to fossil fuel development”

Heralded as the key to Ghana’s energy independence a decade ago,
Ghana’s offshore gas is rapidly becoming a fiscal burden amidst its
debt crisis, raising questions about the World Bank Group’s (WBG)
role in Ghana’s gas development.
A flagship public-private partnership (PPP) supported by the World
Bank in Ghana, the Sankofa offshore gas project – which is backed by
a total of $1.2 billion in WBG guarantees and debt financing – is an
increasing fiscal burden. Under a ‘take or pay’ clause in the Sankofa
contract between Ghana and private sector investors, the Ghana
National Petroleum Corporation (GNPC) must purchase 90 per cent of a
predetermined quantity of gas produced, whether it is able to use it
or not. In 2019, the Ghanaian government’s bill for ‘unused gas’ –
primarily due to the ‘take or pay’ clause in the Sankofa contract –
amounted to $250 million, due to a combination of lack of demand and
associated infrastructure needed to offtake Sankofa’s gas. The terms
of the Sankofa contract were criticised by Ghanaian civil society
organisation (CSO) the African Centre for Energy Policy (ACEP) as
early as 2015 for being unfavourable to Ghana. More generally, CSOs
have persistently raised concerns about the risks of the Bank
promoting PPPs in developing countries (see Observer Winter
2017-2018). The Bank has announced it will stop providing finance for
‘upstream’ oil and gas projects like Sankofa beginning this year (see
Observer Spring 2018).
Ghana’s difficulties come at a time when the energy strategies of
developing African states are being hotly debated, with 19 African
CSOs, including Kenya-based Power Shift Africa and Pan-African CSO
WoMin, releasing a communique during an African Union leaders summit
in Ethiopia in February calling on African leaders to, “put an end to
fossil fuel development…. and rapidly initiate a transition to clean
and safe renewable sources of energy that fully supports access to
energy for those who currently lack it.”
Ghana’s gas lock-in: A costly strategy that’s failing to pave the way
for renewable energy
The fiscal burden of gas in Ghana does not end with the unfavourable
terms of the Sankofa contract. A series of power purchase agreements
(PPAs) signed with electricity producers in 2015 have put Ghana’s
government at a further fiscal disadvantage. As summarised by online
media outlet Economist Intelligence Unit, “the government entered
long-term power-purchase agreements (PPAs) with private producers in
2015, for a total of some 2,300 MW, on the basis that the capacity
would be paid for irrespective of demand. …[Due to supply from PPAs
outpacing demand,] the exchequer has been left with an annual bill of
some US$500m for unused electricity.” All told, due to contract
obligations, Ghana is currently paying an eye-watering amount for
both unused gas and unused electricity. These sectoral developments
emerged as Ghana’s debt levels reached over 60 per cent of GDP in
2019, with the World Bank stating in January 2020 that the country
was at mid-to-high risk of debt distress. To make matters worse, the
COVID-19 pandemic is expected to cause a budget shortfall in Ghana
this year, due to a decrease in revenues from oil exports and
tourism, according to a statement by Ghana’s finance minister on 16
March.
Meanwhile, Ghana’s gas infrastructure development is contributing to
a net rise in Ghana’s energy sector emissions.  While gas investments
have been justified by the World Bank and other supporters as a
‘bridge fuel’ to more sustainable energy use, excluding hydropower,
renewable energy sources remained less than 1 per cent of Ghana’s
energy mix in 2019.
The World Bank: Handmaiden of Ghana’s gas path dependency
It would be difficult to overstate the Bank’s importance in
facilitating Ghana’s gas infrastructure expansion in recent years. As
the Bank noted in the 2018 project appraisal document for a $20
million technical assistance loan, the WBG “has about US$2 billion of
exposure in Ghana’s energy sector,” mostly in the country’s oil and
gas infrastructure. In 2015, the Bank helped facilitate the Sankofa
PPP, providing two guarantees for the Sankofa gas project totalling
$700 million. This included a $500 million payment guarantee from the
International Development Association (IDA), the World Bank’s
concessional lending arm, covering the risks of GNPC not fulfilling
its payment obligations under the Gas Sales Agreement with Eni and
Vitol – the two private oil firms party to the Sankofa PPP. It also
entailed a $200 million Enclave Loan guarantee from the International
Bank for Reconstruction and Development, the World Bank’s medium
income lending arm, supporting project financing for the private
sector by covering debt service defaults. In 2016, the International
Finance Corporation (IFC), the Bank’s private sector investment arm,
provided $300 million in debt financing to help cover Vitol’s stake
in Sankofa, while the Multilateral Investment Guarantee Agency
(MIGA), the Bank’s insurance arm, provided commercial banks who
helped finance Sankofa $217 million in political risk guarantees.
The Bank is also an investor in the 550 MW Takoradi 2 and 3 gas power
plant in Ghana, which processes gas from Sankofa, with IFC providing
$140 million in loans, and MIGA chipping in with a $88 million
guarantee. Additionally, IFC provided $265 million in debt financing
to investors in Ghana’s Jubilee oil field (see Update 65), and IDA
also provided a $50 million partial risk guarantee for the West
African Gas Pipeline, which brings Nigerian gas to Ghana.Given the
Bank’s widespread exposure to Ghana’s gas infrastructure lock-in, it
is little surprise that the above-mentioned 2018 technical assistance
programme was largely preoccupied with issues related to the gas
sector, including a strategy for “balancing gas demand and supply.”
Efforts to support renewable energy were limited to a feasibility
study of potential off-grid energy sources in the country.
bit.ly/GhanaWBG

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IFI GOVERNANCE/news

Senior-level staff changes at World Bank and IMF

Summary
- World Bank chief economist departs as IMF makes series of high-
level appointments

In February, World Bank chief economist, Pinelopi Koujianou Goldberg,
announced she would leave the Bank in March to return to Yale
University, after less than 15 months in the job. This is the second
early departure of a World Bank chief economist in a row, following
Paul Romer’s departure before the end of his term after publicly
questioning the integrity of the Bank’s flagship Doing Business
report (see Observer Spring 2018). The position of chief economist
has been an important link between the Bank’s knowledge and lending
roles, which have often been in tension. Yet, as noted in development
news outlet Devex, according to former Bank chief economist from 2012
to 2016, Kaushik Basu, this role has been “eroded” in recent years,
making it, “harder for the incoming chief economist to…act as an
alternative, more genuine source of advice to developing country
leaders.”
A clear indicator of the role’s diminishing influence is that the
post will no longer directly report to World Bank president, David
Malpass. Instead, they will report to the managing director of
development policy and partnerships, Mari Pangestu, who was appointed
in January. In November, Malpass also appointed a new chief executive
officer (CEO) of the Multilateral Investment Guarantee Agency (MIGA),
the Bank’s guarantee arm. Hiroshi Matano, a Japanese national,
formerly with BOT Lease, replaced Keiko Honda as MIGA CEO.
Meanwhile, across the street…
IMF Managing Director Kristalina Georgieva also seemed to be shaking
things up, as the IMF announced in February that First Deputy
Managing Director David Lipton would be leaving his position before
the end of his term, “in the context of changes [Georgieva] will be
making to the leadership team.” In March, Georgieva proposed the
appointment of Acting Assistant Secretary to the US Treasury,
Geoffrey Okamoto, to the position, which has historically been held
by a US national to offset a European IMF managing director (see
Inside the Institutions, What is the gentleman’s agreement?). Okamoto
previously led the US Treasury Department’s negotiations on trade
with China, played a key role in increasing the IMF’s New
Arrangements to Borrow (see Observer Winter 2019), and helped
establish the Women Entrepreneur’s Finance Initiative (see Observer
Summer 2019). In the same month, the IMF also announced the departure
of Chief Administrative Officer and Deputy Managing Director Carla
Grasso, “whose renewed term had started only five days before her
departure was announced,” according to The Economist.
In September last year, Robert Powell became the IMF special
representative to the United Nations, a position previously held by
Christopher Lane. The senior position is located in New York and
represents the institutional connection for collaboration between the
IMF and all UN bodies and other specialised agencies, which has come
under severe scrutiny in recent years (see Observer Summer 2019,
Winter 2018, Autumn 2017).
bit.ly/BWI-Staff

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GENDER/news

UN holds Pakistan to account for IMF programme impacts on women

Summary
- IMF conditions risk pushing women back into poverty and informal
work

In February, a member of the Committee on the Convention on the
Elimination of all Forms of Discrimination Against Women (CEDAW), the
independent UN body tasked with monitoring the implementation of the
CEDAW Convention, questioned the government of Pakistan about the
impacts on women’s rights of the $6 billion IMF loan agreed in July
2019 (see Observer Spring 2019). The Committee member argued that
regressive taxation measures and the rising costs of services
resulting from IMF-mandated fiscal consolidation targets, “have had
devastating impacts on household costs and have pushed many women
back into informal labour and poverty.” The government was asked
whether the impacts of the programme had been assessed from a gender
perspective and whether measures had been taken to reduce harmful
impacts on women’s rights, other than the further targeting of
existing social protection programmes (see Observer Spring 2018). In
response, Bilquis Tahira with Pakistan-based civil society
organisation (CSO) Shirakat – Partnership for Development, noted, “It
is high time that civil society voices on women’s economic rights are
heard; that CSOs are included in IMF programme negotiations and
reviews; and the current macroeconomic framework underpinning IMF
loans be replaced with a feminist-informed macroeconomic framework.”
In a shadow report submitted to the Committee, Shirakat and civil
society partners reported that the latest IMF programme once again
heavily relied on fiscal consolidation measures. The shadow report
further pointed out that, in its Country Partnership Framework for
Pakistan, the World Bank Group stipulated that additional policy
loans are dependent on the completion of the IMF programme (see
Briefing, The World Bank and Gender Equality: Development Policy
Financing, adding additional pressure to fulfil the programme’s
conditions.
The intervention came on the back of a letter sent to IMF managing
director, Kristalina Georgieva, in February on behalf of 67 civil
society organisations working for gender equality and women’s rights.
The letter echoed the assertion of Committee, arguing that, “policies
still commonly recommended in IMF surveillance and lending
programmes…have exacerbated the feminisation of poverty.” The letter
called on Georgieva to institutionalise the IMF’s recent recognition
that its own policy advice can exacerbate gender inequality and to
prioritise gender, inequality and poverty impact assessment work
relating to the Fund’s bread-and-butter macroeconomic policy advice
(see Briefing, The IMF and Gender Equality: Operationalising Change).
bit.ly/PakistanWomenIMF

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GENDER/analysis

World Bank and IMF response to debt crisis undermines women’s rights
by Iolanda Fresnillo, Eurodad and Verónica Serafini, Latindadd

Summary
- Debt crisis continues to unfold in the Global South
- IMF and World Bank responses cling to austerity and privatisation
- New gender-sensitive debt resolution framework needed

A new debt crisis is unfolding, once again, in the Global South, now
accelerated by the prospect of a global economic crisis amidst the
COVID-19 outbreak. Faced with an increase in numbers of countries at
high risk of or in debt distress, the World Bank and IMF continue to
resort to the same decades-old neoliberal austerity measures focused
on debt repayment. By doing so, they are not only risking advancement
on the Sustainable Development Goals (SDGs), they are also
aggravating the possibilities of economic recession and diminishing
the prospects of economic recovery, further reducing countries’
capacity to carry debt burdens. The austerity recipe means cuts in
public services budgets and in public workers’ salaries, which have
specific impacts on gender inequality, as many women’s rights groups
have shown. While non-debt related government spending is reduced,
the percentage of public revenue that goes into debt service payments
increases. As the latest Eurodad Out of Service report shows,
external debt payments as a percentage of government revenue grew in
low- and middle-income countries from an average of 6.71 per cent in
2010 to an average of 12.56 per cent in 2018.
The push towards private management of public services, through
outsourcing or the World Bank’s promotion of public-private
partnerships (PPPs), is also a consequence of the fiscal constraints
imposed in the wake of debt increase in public finances (see Observer
Spring 2019). PPPs rely on profit streams to ensure investors’
returns, often prioritising profit over people and undermining
quality and universal access to services. In short, PPPs, as
continually promoted by the World Bank, are not more efficient in
providing accessible and quality public services, and can generate
debts that, sooner or later, and with little transparency, are
incorporated into public balance sheets.
There is also evidence that privatisation, PPPs and outsourcing have
had particularly negative repercussions for women. These measures
often come with new or inflated user fees, which increases inequality
by restricting access to services for women, who tend to have lower
incomes. The search for benefits also leads in many cases to
precarious working conditions for women in services outsourced or
operated by PPPs. Finally, contrary to what their promoters argue,
evidence shows that privately financed projects tend to be less cost
effective than those financed through direct government borrowing,
with PPPs costing the taxpayer up to six times more. Ultimately,
therefore, these frameworks undermine the ability of the State to
comply with its international human rights obligations to deliver
quality public services.
World Bank and IMF should reconsider the recipe 25 years after
Beijing
Twenty-five years after governments committed to reviewing
macroeconomic policies from a gender perspective within the Beijing
Declaration and Platform for Action (BPfA), the UN review and
appraisal report, published in December 2019, on the application of
the BPfA expresses the need to assess carefully the impact of
privatisation and PPPs on women and girls, particularly those from
poor and marginalised groups, and to establish accountability
mechanisms to ensure quality, accessibility and affordability for all
without discrimination.
Existing mechanisms to deal with debt crises often deliver “too
little, too late” debt restructuring and relief, which are not only
inefficient to prevent harmful social impacts, but further harm
people’s rights, especially women’s rights. In the wake of a new debt
crisis, intensified by the COVID-19 outbreak, we must redouble our
efforts to demand a shift in the approach to debt resolution, towards
timely and adequate restructurings that put people and equitable
development first, and that comply with the 2030 Agenda on the SDGs
and with international commitments to women’s rights and gender
equality. The approach should be further systematised by the
establishment of a multilateral sovereign debt workout mechanism, to
provide a rules-based approach for orderly, fair, transparent and
sustainable debt crisis resolution.
This must involve a new understanding of debt sustainability that
considers human rights, climate vulnerabilities and gender equality.
It must account for the promotion of gender-sensitive public services
that provide universal access and coverage, and that are publicly
funded, delivered, and managed in a transparent, participatory and
accountable manner, and are provided by public sector workers in
decent work. In this sense, the ideologically-driven promotion of
PPPs, especially by the World Bank, to finance and deliver public
services should cease, and the IMF should put an end to the promotion
of austerity through direct conditionality or surveillance, so that
it shifts the burden of adjustment away from the most vulnerable in
society, particularly women.
bit.ly/DebtCrisisGender

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ACCOUNTABILITY/news

World Bank board silent on Guatemala dam investigation review after
February meeting

Summary
- Board held unprecedented meeting on CAO Guatemala investigation
- Civil society groups fear accountability concerns will not be
addressed

In February, the World Bank’s executive board met to review the
investigation of the Compliance Advisor Ombudsman (CAO) – the
accountability mechanism of the International Finance Corporation
(IFC), the Bank’s private sector arm – into IFC’s role in the
controversial Santa Cruz Barillas hydroelectric dam project in
Guatemala (see Observer Spring 2014).
This marks the first time that the board has asked to review the
outcome of a CAO case ahead of publication, as normally
investigations are only reviewed by management of the World Bank
Group before they are made public. At the time of publication,
neither the CAO’s investigation, completed in 2018, nor IFC
management’s action plan responding to the investigation, have been
made public.
The board’s February meeting took place amid the external review of
the CAO (see Observer Winter 2019), after the US Supreme Court’s 2019
ruling against IFC’s claim of absolute immunity (see Observer Spring
2019). While some civil society organisations (CSOs) hope that this
might set a precedent for greater accountability of the IFC, the
board’s silence following the meeting is cause for concern that IFC’s
role in causing grave harms is not being taken seriously.
Kate Geary from Netherlands-based CSO Recourse said, “This gives the
board an opportunity to do the right thing: to ensure that any
breaches of IFC standards found by the CAO are addressed effectively
by IFC to remedy the harms that communities continue to suffer to
this day.”
In 2008, IFC provided $20 million in loans to, and a made a $9.9
million equity investment in, Latin American financial intermediary,
Corporación Interamericana para el Financiamiento de Infraestructura
(CIFI), which financed Hidro Santa Cruz to build the hydroelectric
dam.
While the dam was under construction, Hidro Santa Cruz was linked to
alleged human rights violations of the local residents of Santa Cruz.
Many in the local Q’anjob’al community considered a waterfall
impacted by the project to be sacred and claimed that the company had
violated their right to free, prior and informed consent.
In 2014, Guatemalan CSO, the Departmental Assembly of Huehuetenango
(ADH), publicly denounced the company, stating that its actions had
“resulted in the persecution, intimidation, and co-opting of
community leaders,” and accusing the Bank of being complicit in human
rights violations. In 2015, CSO Oxfam supported local communities in
Guatemala to file a case to the CAO, following the inclusion of the
case in its publication The Suffering of Others, published in the
same year.
The complaint to the CAO alleged that opposition to the project was
met with violence and repression by the company and the government.
During the state of emergency declared by the government in response
to resistance, dozens of community organisers and leaders were
arrested and detained. The project was stopped in 2016, one year
after the complaint was submitted.
bit.ly/GuatemalaDam

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RIGHTS/news

Civil society launches framework to assess human rights impact of
health privatisation

The Global Initiative for Economic, Social and Cultural Rights (GI-
ESCR) launched a new report in December 2019 setting out a
preliminary framework for human rights impact assessments to evaluate
the consequences of private sector activity for the right to health.
As reconfirmed by the report, the World Bank has long been criticised
for its push to privatise health services, including through public-
private partnerships, which have been “found to weaken the budgets of
public health services” (see Observer Spring 2020, Spring 2017).
Additionally, IMF conditionality attached to loan programmmes have
also negatively impacted the most vulnerable and undermined human
rights through imposed austerity measures and prioritisation of debt
repayment (see Observer Autumn 2018, Winter 2015).
In 2018, the UN special rapporteur on extreme poverty and human
rights condemned the widespread privatisation of public services as,
“systematically eliminating human rights protections and further
marginalising those living in poverty” (see Observer Winter 2018).
The GI-ESCR report goes beyond more generalised criticisms (see
Observer Spring 2017). It sets out a human rights framework to assess
the harm private sector projects cause and the obligations of States
to prevent these harms under international human rights law.
bit.ly/GI-ESCRhealth

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