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International
Monetary Fund and the World Bank
The Spring Meeting of the IMF and the World Bank
April 2001
The
International Monetary Fund and the World Bank were founded
at Bretton Woods in 1944 and officially they were to be
two distinct autonomous institutions. Legally, their constitutions,
memberships, budgets and staff are separate and they operate
within different headquarters buildings. Politically, however,
the two are much closer to each other than any other pair
of global institutions. Their major policy meetings occur
at the same time, in the same place. Ministers meet twice
a year in the International Monetary and Financial Committee
(IMFC), which “advises” the Fund, and the Development
Committee (DC), which “advises” the Fund and the
Bank. Although the two committees have no legal decision-making
powers, their political weight makes them the focus for
new policy initiatives.
As is usual, there were officially only two days for the
two main meetings held in April of this year. The IMFC met
on Sunday 29 April and the Development Committee, met the
next day. There was also a brief joint meeting of the two
committees. In practice, a wide variety of events occurred
over the preceding week. Initially, the large US NGOs hosted
a variety of NGO conferences, press briefings and meetings
with Bank or Fund staff. It is particularly important that
some were able to fund attendance from Southern NGOs. On
the Friday, James Wolfensohn, the President of the World
Bank and Horst Köhler, President of the IMF set the
scene for the media, by each holding a press conference.
On the Saturday, the two major governmental caucuses held
their meetings. The developing countries met as the Group
of 24 and the Western industrialised countries met as the
Group of 7, followed by the G10 on the next day.
Two Major Reports
On
the Thursday, the IMF presented the latest edition of the
biannual World Economic Outlook. With the US and Japan offering
minimal growth, its author, Michael Mussa, called for reduced
interest rates in Europe and asserted “The Euro area
needs to become part of the solution rather than part of
the problem”. The technical argument was important
for developing countries because the general global slowdown
was predicted to reduce African export earnings from their
commodities. Nevertheless, China, India, Latin America and
some African countries remained the best hopes for economic
growth.
On the Sunday, the fifth edition of the annual World Development
Indicators was launched by the World Bank. Both this report
and maps showing changes since 1990 in the indicators for
the International Development Targets are available on World
Bank websites.
Current Debate about Debt Relief
One
set of NGOs focused on criticism of the slow speed and the
limited amount of relief that has been offered under the
Heavily Indebted Poor Countries Initiative (HIPC). After
nearly five years, there were still only 22 of the 41 countries
expected to benefit that had reached the decision point
(when eligibility for debt relief is agreed) and only Uganda
had passed the completion point (when the bulk of the debt
is cancelled). Wolfensohn argued that the Bank could not
continue operating if all its debts were cancelled. Nevertheless,
great emphasis was laid on the ability to offer more relief
if a country’s position deteriorated between its decision
point and its completion point. The IMF also announced it
was seeking funding for a new emergency post-conflict facility
to provide subsidised assistance to countries affected by
conflict, eleven of which were African countries on the
HIPC list.
Bank Policy on Disclosure of Information
Another
set of NGOs focused on the issue of ensuring country ownership
and local civil society participation in production of the
Poverty Reduction Strategy Papers (PRSPs). After the new
approach was announced in September 1999, NGOs soon became
disillusioned with badly organised consultations and events
that ultimately did not contribute to the policy-making.
One important point was repeatedly and forcefully stressed:
no consultation exercise could be meaningful if local NGOs
did not have access to the policy documents. The Bank recognised
it had to review and update its policy on information disclosure,
but initially tried to keep the drafts of the new policy
secret. The Bank Information Center (a Washington-based
NGO) delivered a letter signed by more than 500 organisations
from over 100 countries calling for full disclosure. Wolfensohn
argued that five years ago no documents were released and
now 85% were.
The constraint was opposition from member governments, but
the goal was “total transparency”. While Wolfensohn’s
strong personal commitment was expressed convincingly, he
was overstating what had already been achieved. It is a
measure of how far the Bank has to go when it still releases
less information than the Fund.
A New Fund for Communicable Diseases
In
recent years the World Bank has devoted increasing attention
to the fight against communicable diseases, first AIDS and
tuberculosis and then malaria. Finance is going both to
projects in individual countries and to support research
on drugs and vaccines. Several factors came together to
make this a priority issue: Kofi Annan’s lead at the
UN; the G8 International Conference on Infectious Diseases
at Okinawa in December 2000; the increased emphasis on poverty
reduction; and the recent court case in South Africa regarding
the availability of cheaper drugs. For the first time, the
IMFC endorsed “the need for global action on health”
and the concern was carried forward with the idea of a new
multilateral trust fund for the three main diseases. The
clear hope expressed to the press by Wolfensohn was to gain
commitments for a multibillion dollar fund administered
by the Bank, in time for its announcement and endorsement
at the UN General Assembly Special Session on AIDS in June
2001.
Financing for Development
At the same time as the Spring Meetings were taking place
in Washington, the third session of the Preparatory Committee
for the Financing for Development (FFD) “high-level
event”, due in early 2002 in Mexico, was getting under
way in New York. The two events ran in parallel. Apart from
a Quaker pamphlet distributed among the NGO papers, FFD
was not mentioned publicly in Washington. In New York, ECOSOC
was able to host a high-level meeting with the key leaders
on the day after the Spring Meetings, but there was no direct
input to the FFD process. However, the Bureau of the FFD
PrepCom did report that the Executive Boards of both the
Bank and the Fund were engaged in dialogue about their participation
at the Mexico event. In contrast, the WTO Committee on Trade
and Development was too divided to finalise any position
on FFD.
The International Financial Institutions
and Globalization
There
is widespread awareness among NGOs that the policy language
at the Fund and the Bank has changed, but it is often assumed
that the International Financial Institutions (IFIs) remain
tools of a supposedly-coherent entity, called global capitalism.
Thus, NGOs quite often express fear of “co-option of
the poverty discourse” by the Bank. NGOs have a professional
bias against optimism, so nobody dares suggest in public
that there has been a real change in policy. The key figure
is Wolfensohn, as President of the Bank. He must either
be regarded as an accomplished actor or a sincere advocate
of progressive change. Whether one observes the care with
which he biased his press conference towards questions from
women or the simple manner in which last November he went
out in the dark to a police barricade in Delhi, in order
to address Indian demonstrators against the Narmada dams,
it is difficult to believe Wolfensohn is duplicitous. The
problem is whether the change at the top can be translated
into change within all the departments and the field missions
of each institution.
The IMF is terrified of the possibility of a financial crisis
in one country generating a threat to the whole global financial
system, followed by widespread economic collapse and political
upheaval. Those concerned with social development are similarly
scared of the impact of global markets upon the poor and
are angry about collusion between transnational corporations
and exploitative élites. The two sides can be allies
rather than enemies, because the Fund, the Bank and the
NGOs all now want transparency in the economic system, an
end to corruption, the rule of law and democratic government.
Although the Fund has not adopted a poverty agenda for as
long a time nor in such depth as the Bank, their desire
for financial stability does mean their governance agenda
is genuine.
More NGOs should seize this opportunity and engage fully
with the civil society consultations that are a required
process in the production of the Poverty Reduction Strategy
Papers. To remain distant is to hand victory to the forces
of inertia. Instead of being afraid of co-option into the
Washington Consensus, NGOs should co-opt the Washington
institutions into their people-centred, anti-poverty consensus.
Peter
Willetts is Professor of Global Politics, City University,
London
For a longer version of this article, see: www.gapresearch.org
Web sites:
The International Monetary Fund: www.imf.org
The World Bank: www.worldbank.org
World Development Indicators: www.worldbank.org/wdi
International Development Targets: www.internationalgoals.org
A Better World for All: www.paris21.org/betterworld
The Global Environment Facility: www.gefweb.org
The Intergovernmental Group of 24: www.g24.org
The Bank Information Centre: www.bicusa.org
The Fund and the Bank info centre: www.brettonwoodsproject.org
The Globalization Challenge Initiative: www.ChallengeGlobalization.org
Jubilee 2000: www.dropthedebt.org
Oxfam: www.oxfaminternational.org
Global South: www.focusweb.org
The Globalisation and Poverty Research Programme: www.gapresearch.org
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