Recent
Developments in IMF-CSO Relations
This issue of the Civil Society
Newsletter comes at a time of
considerable debate about economic
development strategies. The effort
to achieve a new global agreement on
trade encountered serious obstacles
at the World Trade Organization
Ministerial in Cancún, Mexico, in
September, posing a new challenge to
the international community. And
recent political events in Latin
America have raised again questions
about appropriate economic
strategies. At the same time, some
economic gains have been made by
many developing countries on all
continents, creating an opportunity
for the Fund to explore how it can
make the best contribution to long
term development and progress toward
the Millennium Development Goals.
Many of these issues were at the
forefront of the discussions that
took place at the Annual Meetings of
the IMF and World Bank in Dubai
during September. The Fund's
ministerial-level International
Monetary and Financial Committee
(IMFC) directly addressed the
failure in Cancún, re-asserting a
worldwide commitment to the
multilateral trading system, and
also examined strategies for helping
the developing world (see
article on IMFC
communiqué). IMF Managing
Director Horst Köhler also examined
these issues in his keynote
speech to the Annual Meetings.
Similarly, several seminars and
discussions on the sidelines in
Dubai examined key questions,
including the Fund's role in
low-income countries (see
article). In a
recently published
paper the Fund reviews the
question of how it can best assist
low-income countries while remaining
true to its mandate; on this,
feedback is sought from the public.
In the closely related
paper on debt sustainability
discussed in the
last issue of the newsletter,
the Fund has been addressing how the
international community can best
help poor countries, including the
most heavily indebted, maintain a
sustainable debt position in the
long term.
Civil society organizations
(CSOs) also were active at the
Annual Meetings, especially groups
from the Middle East. CSO
representatives participated in a
well-attended
Townhall Meeting with Gordon
Brown, U.K. Chancellor of the
Exchequer and Chairman of the IMFC;
Trevor Manuel, South Africa's
Minister of Finance and Chairman of
the World Bank's Development
Committee; IMF Managing Director
Horst Köhler; and World Bank
President James Wolfensohn. It was
the first time that this
high-powered quartet had appeared
together in a session with CSO
representatives. The meeting
addressed many issues of concern to
CSOs, including one of the issues on
the Dubai agenda: "voice and
representation" of developing
countries in the governance of the
IMF and World Bank.
One session
with CSO representatives covered the
newly issued IMF "Guide
for Staff Relations with Civil
Society Organizations", prepared
in close consultation with Jan Aart
Scholte of the Centre for the Study
of Globalisation and Regionalisation
at the University of Warwick in the
U.K., and based on interaction with
IMF staff and civil society groups.
The guide has been distributed to
Fund staff and posted on the
external website along with a
request for public comment. The
intention is for the guide to become
a "living document" that can be
reassessed as Fund staff gain
greater experience in their
interaction with civil society.
Finally, this issue features an
extended interview
with Montek Singh Ahluwalia,
Director of the IMF Independent
Evaluation Office (IEO), which is
charged with conducting assessments
of the Fund's work. The IEO has
become a key intermediate point of
contact between the IMF and civil
society, and Mr. Ahluwalia in his
interview offers perspectives on
that interaction.
As always, the staff of the Civil
Society Newsletter welcomes
suggestions on coverage from our
readers around the world.
Back to Table of
Contents
Feature Article
An interview with Montek S.
Ahluwalia
Montek Singh Ahluwalia, 60, is
the first director of the IMF's
Independent Evaluation Office.
The IEO was established in 2001 to
provide objective assessments of the
Fund's work. In keeping with that
objective, the IEO decides its own
work program independently of the
IMF Executive Board and management,
and Mr. Ahluwalia and his successors
are barred from future employment at
the IMF. An economist, Mr. Ahluwalia
began his career in the World Bank
in 1968, returning 11 years later to
his native India, where he served as
Finance Secretary in the Ministry of
Finance; Secretary in the Department
of Economic Affairs; Commerce
Secretary; Special Secretary to the
Prime Minister; and Economic Advisor
in the Ministry of Finance. Mr.
Ahluwalia was educated at Delhi
University and at Oxford University.
He took over the IEO on July 9,
2001.
Q: To what extent do you see
CSOs as part of the IEO
constituency?
A: They are definitely
an important part. The IEO was set
up in part because of the very
strong perception on the part of
CSOs that the Fund was
inadequately transparent. As our
Annual Report notes, CSO
inputs were prominent in the
period when the Board was
discussing the need to set up this
office. Our
terms of reference also make
it clear that one of our
responsibilities is to create a
better understanding of Fund
activities among a broader group
of stakeholders. Any CSO concerned
about issues that the Fund is
concerned about is therefore a
natural constituency.
Q: What are the methods that
the IEO has developed to interact
with civil society?
A: We have developed
mechanisms for interaction at
several stages. First, at the
stage of defining the work
program, we have made provision
for lateral inputs. Before
defining the work program, we
first prepare a discussion paper
which outlines a menu of
possibilities, and put it on the
Web and invite comments from all
concerned, including CSOs. We give
them six weeks to convey their
views on which of the proposed
topics is more important, or even
suggesting topics we may have
missed. We have also organized
discussions with civil society
groups interested in interacting
with us. This input is taken into
account in determining the work
program.
Having chosen a topic, we try
to ensure that the terms of
reference of the study do not
prejudge critical issues or fail
to reflect legitimate concerns. We
follow a two-stage method for
defining the terms of reference.
First, we put an issues paper on
the website indicating our
perception of the main issues to
be addressed and invite comments.
After considering the comments
received we put a final terms of
reference on the web.
Finally, we then invite all
concerned, including CSOs, to
contribute substantive inputs on
the issues identified in the terms
of reference as relevant to the
study.
Q: Is the aim that CSOs
decide on the themes and methods
of your work?
A: Not to decide—that
is for us to do—but
certainly to give them an
opportunity to participate. In the
end, the responsibility for
evaluations rests with the IEO,
but by consulting extensively we
give them an opportunity to be
heard. They could fairly criticize
us if they feel their views have
not been given fair consideration.
Q: How do CSOs participate
in the actual evaluation process?
A: As I said, we invite
CSOs to make submissions to us on
issues covered in the terms of
reference. If some CSO has done a
lot of work in a particular
country or issue, they could send
their material to us and expect us
to take it into account. The final
report is our responsibility. We
don't delegate or subcontract
evaluations to CSOs, but we are
willing to hear their views.
In the ongoing study we're
doing of Argentina, we have
received a huge amount of input,
not from traditional CSOs, with
whom we are in regular contact,
but from small groups of Argentine
bank depositors complaining about
what they considered abuse of
property rights, as they saw it,
reflected in asymmetric conversion
of dollar bank deposits into
pesos. I quote this only as an
example of how issues surface in
many different sorts of ways.
Q: Is the Web the IEO's only
means for interacting with
far-flung civil society
organizations?
A: No; a pure Web-based
interaction cannot possibly reach
all relevant NGOs so we do resort
to direct interaction. In a
consultation in Africa in 2001,
when some of our people met with
many country delegations, they
made us very aware of the fact
that just because something is on
the Web does not mean it is easily
accessible. Access is a problem in
many countries, downloading is not
easy and there are language
problems. We are actively trying
to make our material more
accessible to a non technical
audience and to regional language
groups that may not be familiar
with English, which is the
language of the Fund. In the case
of the capital-account crisis
project, for example, parts of the
report will be translated and
available in the local language.
Q: Your office has released
three reports to date. What are
the themes common to them all?
A: I can think of
several common themes. One relates
to the tradeoff between candor and
transparency. The Fund has to play
a major role in surveillance,
making people aware of issues and
problems in their countries. To
the extent that this work is
confidential, there is no problem—you
can be as candid as you like in
private. However, the extent to
which countries will be willing to
be candid with the Fund is a
function of how transparent the
Fund is going to be. It is not
easy to strike the right balance.
Excessive optimism at the stage
of program formulation is another
common theme from many country
experiences. Yet another issue is
the time mismatch between the
duration of an IMF program and the
time period needed for longer-term
policies to have an impact. A
program has a span, at most, of
three years. But for many
structural problems, the time
frame in which corrective policies
can have an effect is several
years. If you design
conditionality to focus on
generating an effect within three
years, you're likely to be
concentrating on things that have
a short-term effect and giving
less importance to measures that
have long-term effect. Yet it is
the latter that are actually more
important.
Q: With tension between
candor and transparency built into
the process, to which approach is
the IEO inclined?
A: We are in favor of
the Fund tilting in favor of
greater importance given to
transparency. We recognize that
full transparency may not be
possible on all issues. There are
situations where transparency can
be unduly disruptive and this must
be a matter of concern, especially
where judgments have to be made in
the face of uncertainty and the
probabilistic nature of judgments
may not be fully recognized. The
issue has become accentuated
because of the perception, after
the crises of the 1990s, that the
Fund must play an important role
in keeping markets informed. The
belief is that better-informed
markets will behave better and
will be more stable. Hence the
perception that Fund surveillance
can play a critical role. If that
is to be the Fund's role,
surveillance has to be more
transparent—telling
markets what the Fund really
thinks. This can be problematic.
The desire to retain influence in
the advisory role can lead to
moderation of concerns on policy,
but beyond a point this can reduce
the effectiveness of surveillance.
Q: Concerning the time
mismatch you spoke of, the irony
is that it encourages an emphasis
on short-term results that
multilateral organizations like
the IMF tend to advise against.
A: That is true.
Consider a country that has
problems of fiscal sustainability
because its tax base is too
narrow. To have an impact in the
next two or three years, the
simplest thing to do may be to
take an existing tax and increase
the rate. However what may be more
important in the longer run is to
broaden the tax base and improve
the efficiency of the revenue
administration. However, it is not
very clear that the results would
become evident in three years.
Restructuring a revenue service is
simply not something that can be
done in three years.
So how do you handle the fiscal
balance in the short run? Do you
cut some expenditures somewhere or
just live with a bigger fiscal
deficit? The solution one of our
studies has proposed is that the
Fund should use surveillance to
develop an understanding of the
road map for reform, which is
actually owned by the country.
When programs have to be designed,
the Fund could use the road map to
look for workable solutions drawn
from it. Presently, only the
low-income countries have such a
mechanism—the
Poverty Reduction Strategy Paper—which
spells out a road map. We don't
think that non-low-income
countries should be made to have
PRSPs. But we think we should
explore the possibility of using
surveillance to encourage a
dialogue with countries in
nonprogram years and develop their
own road map. This may make
surveillance appear too intrusive,
and that is a concern that has to
be dealt with.
Q: The
IEO report on fiscal adjustment
concluded that social spending is
not reduced overall as a result of
Fund programs—which
would seem to uphold the position
of the IMF rather than its
critics.
A: The study found mixed
results. It does establish that
some of the common criticisms of
Fund programs are not valid and
aggregate social sector
expenditures are not necessarily
squeezed. On the other hand it
also points out that, very often,
while total social sector
expenditures may not be squeezed,
many critical components do get
squeezed when fiscal difficulties
arise. If demands for real wage
increase and the like can't be
resisted, you might find a
situation where wages and salaries
in the health service go up, but
money for medicines goes down.
What should the Fund do? You
can't have a Fund program that
goes into this level of
micro-detail. Our recommendation
is to encourage countries to come
forward in normal times with their
ideas on how they would protect
critical programs. The Fund could
provide a forum through its
surveillance mechanism where these
ideas get discussed. Countries
wanting technical assistance to
develop such mechanisms could get
it from the World Bank.
Q: Much of what you
recommend might be considered
intrusive. How have governments
reacted?
A: From our point of
view, we must judge the
governmental response on the basis
of the responses in the Executive
Board. We are gratified that the
thrust of our recommendations has
received broad Board endorsement—both
from the borrowing countries as
well the countries that typically
do not borrow. Sometimes there are
mixed views, but you expect that.
It is true that what we propose
often goes beyond what the Fund
has done traditionally, but we can
only add value if we push the
envelope and see how to take care
of legitimate concerns that arise.
Back to Table of
Contents
The 2003 Annual
Meetings in Dubai:
Report from the
International Monetary and Financial
Committee (IMFC)
Senior government officials from
around the world traveled to the
Persian Gulf this year for the
Annual Meetings of the IMF and World
Bank. The Boards of Governors of the
two institutions, made up of
ministers and central bank governors
from the 184 member countries,
gathered in plenary session
September 23-24 in the United Arab
Emirates state of Dubai. As usual,
the gathering was preceded by a
separate meeting of the
International Monetary and Financial
Committee (IMFC) of the IMF's
governors.
The
IMFC communiqué surveyed the
global economic climate and welcomed
the increasing signs of global
recovery. However, the committee
also pointed to the risks faced by
many countries and highlighted the
importance for rich and poor
countries alike of sustained and
vigorous reforms to underpin
balanced growth.
In addition, the IMFC pointed to
a worldwide risk: a threat to the
growth of international trade. In
its communiqué, the committee called
urgently for resumption of trade and
development negotiations, known as
the Doha Round, which broke down
earlier in September in Cancún,
Mexico. Once the talks are back on
track, the ministers said,
governments should focus on the
importance of opening markets,
providing fair access, and reducing
trade-distorting subsidies in all
areas—especially
agriculture. They said trade
expansion is essential for vigorous
global growth as well as the
achievement of internationally
recognized development goals. The
IMFC supported a Fund initiative to
provide assistance to countries to
help them adjust to the impact of
trade reforms.
Addressing the challenges faced
by the industrial countries, the
IMFC recommended that monetary
policies should continue to support
demand in the context of low
inflation, and that fiscal policies
should aim to deliver a reduction of
deficits in the medium term, while
allowing short-term flexibility if
activity weakens. The IMFC referred
to the vigorous pursuit of
structural reforms, and enhanced
corporate governance and
transparency as key to stronger,
globally balanced growth. Among
specific recommendations: the United
States should aim fiscal policy
toward strengthening sustainability
in the medium term; Europe should
continue structural reforms aimed at
boosting employment and investment;
and Japan should strengthen its
banking and corporate sectors.
Turning to low-income countries,
the committee noted that many have
strengthened macroeconomic policies
and have undertaken policy reforms,
which have improved the prospects
for growth. But the ministers also
said that growth will have to
accelerate significantly in order to
reduce poverty and meet the
Millennium Development Goals.
Stronger policy frameworks and
institutions, better governance,
improved market access, and larger
and more effective aid flows are all
needed, the IMFC said.
The communiqué pledged continued
IMF support for low-income
countries. Initiatives are needed to
enhance that support, the IMFC said.
These should take the form of such
measures as ensuring that
macroeconomic policy frameworks
support higher and sustained growth
and poverty reduction, and reducing
vulnerability to shocks. In
addition, the IMF should help
countries move beyond sustained
reliance on IMF financial
arrangements. Focusing attention on
Africa, the IMFC said African
countries should move forward with
regionwide implementation of the New
Partnership for Africa's Development
(NEPAD), especially to strengthen
the foundations for investment and
private sector-led growth.
Furthermore, the IMFC called on
the IMF, in collaboration with the
World Bank, to develop strategies to
help countries implement the
policies needed to obtain the debt
relief under the Heavily Indebted
Poor Countries (HIPC) Initiative
that would achieve a lasting exit
from unsustainable debt. All
creditors that have not yet granted
full debt relief were urged to do
so, with the IMF asked to report on
the extent of compliance. The
communiqué also recognized the
importance of providing "topping-up"
assistance to HIPC recipients as
appropriate, and cited the on-going
discussions on the topping-up
methodology and financial
implications.
The IMFC expressed support for a
multilateral effort to rebuild Iraq,
and approved the idea of the Fund
providing financial and other
assistance to that country.
The IMFC reaffirmed that
strengthened IMF surveillance is
essential to enhancing crisis
prevention and promoting stability
and sustainable and effective
growth. The Committee said it would
discuss in 2004 progress in
improving the quality, effectiveness
and persuasiveness of IMF
surveillance. The communiqué
emphasized the importance of greater
transparency and candor in IMF
advice to member countries. The
Committee also welcomed the work of
the two-year-old Independent
Evaluation Office (see
related story in this issue) in
enhancing the learning culture,
effectiveness and accountability of
the IMF.
Back to Table of
Contents
Civil society
dialogues in Dubai
The Annual Meetings provide
extensive opportunities for
consultations and seminars alongside
the formal meetings. The Dubai
authorities made excellent provision
for CSO representatives attending
the meetings, which facilitated a
program of civil society dialogues
that extended over the better part
of a week. Some sessions were
organized by CSOs themselves, while
others were arranged by officials of
the two institutions. Given that
these were the first Annual Meetings
in the Middle East, and that many
CSO representatives from the region
had not attended previous meetings,
the discussions included an overview
of work in the Middle
East and North Africa. Other
sessions focused on
low-income countries and
Fund outreach to CSOs.
Back to Table of
Contents
The IMF in the Middle East and
North Africa
Mohamad Chatah and Zubair Iqbal
(of the IMF's External Relations and
Middle Eastern Departments,
respectively) conducted a session
designed to outline the diversity of
the Fund's work in the Middle East
and North Africa (MENA) region. This
diversity reflected the wide
geographic coverage of the
department, which includes not just
Arabic-speaking countries, but
countries as far flung as Sudan and
Pakistan. And the coverage is about
to get even wider, following a
reorganization that brings several
Central Asian countries into the
renamed Middle East and Central Asia
Department (effective November 1).
Questions from the 15
participants reflected many of the
key concerns of the region, most
going well beyond the attainment of
macroeconomic stability. In economic
policy advice, should more emphasis
be placed on achieving better income
distribution than on growth? Could
the Fund support progress toward
democracy? Could the Fund impose
conditionality that would promote
good governance? What could the Fund
do to support Palestine? What
capacity building support could the
Fund give to civil society
organizations?
The Fund's mandate means that it
cannot address all these issues
directly or on its own. Iqbal and
Chatah explained that the Fund has
three main activities: policy advice
and dialogue through "surveillance",
capacity building through technical
assistance, and lending. The Fund's
mandate centers on macroeconomic and
financial policies, but advice
inevitably goes well beyond a narrow
focus on macroeconomic stability.
Structural change is uppermost on
the agenda in many countries:
financial sector reform;
strengthening public sector finances
through tax and expenditure reform;
promoting transparency; and working
with countries as they attempt to
diversify their economies.
In post-conflict situations—such
as Afghanistan, Iraq, or Palestine—the
Fund's work emphasizes the
capacity-building necessary to put
in place the rudiments of effective
monetary and financial systems and
public sector management. Such
technical advice and assistance is
extended even where it is not
possible to provide loans. In these
situations, and indeed in most
countries, the Fund works closely
with other international agencies—the
World Bank, the United Nations and
bilateral donors—to
make sure that its contribution is
effective and consistent with
national objectives and
international strategies.
Back to Table of
Contents
The role of the IMF in
low-income countries
The IMF has
initiated public discussion of a
paper on the role of the IMF in
low-income member countries. The
Annual Meetings in Dubai provided a
good opportunity for direct dialogue
on the issues. Two seminars took
place in Dubai, one for officials
and visitors to the Annual Meetings,
and the other specifically for civil
society organizations. The article
below combines perspectives from
both sessions.
Defining the issues
Opening both sessions, Mark Plant,
Advisor in the IMF Policy
Development and Review Department,
argued that to improve the prospects
for low-income countries to realize
the Millennium Development Goals
(MDGs), countries need to adopt
policies that promote growth and
poverty reduction. But they will
also need to receive much more
assistance—both
technical and financial—with
a larger proportion of grant aid.
How can the IMF assist most
effectively, given that it is not
primarily a development institution
and has neither the capacity nor the
mandate to contribute to substantial
long-term flows of resources needed
to meet the MDGs? The Fund can
support countries by helping them
establish macroeconomic stability as
the foundation for sustained growth
and to deal with shocks from beyond
their borders.
But how can IMF-supported
programs look beyond macroeconomic
stability to promote sustained
faster growth and poverty reduction?
Plant highlighted several
principles that would help guide the
debate. The IMF will remain engaged
with low-income countries over the
long term, by embracing the Poverty
Reduction Strategy Paper (PRSP)
process as the framework for working
with countries to achieve the MDGs.
More aid is desirable, but for the
long term the aim should be to help
countries rely on private sources of
financing. And the IMF must work
with developed countries to ensure
their policies—especially
in trade and agriculture—support
growth in low-income countries. The
IMF will focus on its core areas of
competence: macroeconomic and
financial policies. Its primary
assistance will be policy advice,
given through surveillance and
technical assistance, and in
programs supported by the Poverty
Reduction and Growth Facility (PRGF)
lending.
The debate: an overview
Participants welcomed the IMF's
willingness to undertake the review.
Most discussants called for the
increased emphasis on country
ownership to be matched by greater
flexibility on the part of the IMF.
Lucie Kasanga of Jubilee Zambia
stressed how important it was that
the Fund should undertake more
country-level assessments, arguing
that it needs to focus more on the
social and political setting in
which economic policy and poverty
reduction strategies are being
designed. She also thought it
unfortunate that the IMF had ruled
out a broader review of PRSPs.
Saifur Rahman, Minister of
Finance and Planning of Bangladesh,
argued, that the IMF and World Bank
need to achieve a higher degree of
coordination if their advice to
countries is to become more
effective. Rahman also stressed that
private capital flows would come
only after developing countries
establish an environment conducive
to private sector development—truly
a long-term process. Ulan Sarbanov,
Chairman of the National Bank of the
Kyrgyz Republic, argued that the IMF
still needs to pay attention to
issues outside of its core areas.
For example, if a country has a
large public sector, the IMF must
look not only at tax policy but also
at the energy sector or the
financial sector if that is where
macroeconomic problems are rooted.
Paul Ladd of Christian Aid argued
that the Fund's advice should be
firmly rooted in the MDGs, and use
poverty and social impact analyses.
He also felt that the Fund's
"gatekeeping" role—the
reliance by donors and investors on
IMF-supported lending as the trigger
for their own lending—needs
to be reduced.
Discussion was wide ranging. A
recurring theme was the need to base
the Fund's work on the MDGs, and
related to that, the critical
importance of being able to
contribute to reducing the impact of
HIV/AIDS on Africa's economies.
Others called for closer links
between the programs supported by
IMF lending to poor countries and
their poverty-reduction strategies
to ensure that the conditions of the
former do not hinder the goals of
the latter.
Participants also questioned
aspects of IMF-supported polices,
particularly privatization—whose
benefits, they argued, have not been
proved—and
what they alleged to be the
mechanistic approach to the
formulation of stabilization
programs. One participant argued
that it would be better to
concentrate on income distribution
rather than growth, which is skewed
toward the rich. Other speakers
commented on the important role that
technical assistance can play, and
many echoed the call for greater
flexibility and sensitivity in
policy advice.
Readers are invited to contribute
to this debate by reviewing and
commenting upon the paper "The
Role of the International Monetary
Fund in Low-Income Member Countries",
which is available for comment on
the IMF website through December 31,
2003. Please send your comments by
December 31, 2003 to
licfundrole@imf.org.
Back to Table of
Contents
Guide to IMF Staff Relations
with CSOs - Public discussion begins
CSO representatives in Dubai gave
a qualified welcome to the IMF's
proposed "Guide for Staff Relations
with Civil Society Organizations"
shortly before it was launched. The
Guide has now been issued to the IMF
staff, and has been
published with an invitation to
comment. In Dubai, a panel
discussion on the Guide included
Michael Bell of the IMF External
Relations Department; Alan Whaites,
Director of International Policy and
Advocacy for World Vision
International; and Wahyu Widiarto,
Director of the Institute of
Development and Economic Analysis in
Indonesia. Altogether there were
about 25 participants at the
session.
Bell outlined the consultative
process that had led to the draft:
(i) a first draft prepared by Jan
Aart Scholte, professor at the
Centre for the Study of Globalisaton
and Regionalisation at the
University of Warwick in the U.K.,
based on consultations with IMF
staff; (ii) a second draft prepared
after an extensive process of
comment coordinated by Scholte in
which a panel of about 30 CSO
representatives reviewed the
document in parallel with an
internal IMF review; and (iii) a
final draft after a last round of
Fund staff review. Bell said that
the process had revealed a
surprising amount of outreach
already being undertaken by staff
throughout the Fund. But he also
noted that an almost universal
concern on the part of staff had
been about the "resource
implications" of more extensive
outreach. Striking the right balance
had been one important factor
addressed in the final round of
reviews.
Whaites recalled an earlier World
Vision paper that had identified
three essential areas—capacity,
culture, and process—in
which the Fund would have to act if
it was improve its relations with
civil society. He said the draft
guide addressed only one of these:
process. Based on World Vision's
experience, relations in the field
with Fund staff were often
difficult. There is still much to be
done, especially in terms of
enhancing the Fund's capacity to
undertake effective outreach
in-country. He also regretted the
"indeterminate state" of the note:
an indicative guide rather
than a more prescriptive guidance
note, which had been the earlier
proposal.
The key question or test was
whether ownership was being
promoted, Wahyu argued. The Guide
seemed to confirm the remoteness
between the elites—the
decision makers—and
the people. For instance he asked
how in a huge country like
Indonesia, ownership can be advanced
through the CSOs. The barriers are
enormous: the CSOs have little
access to information, to the
decision-making processes, or the
decision-makers. How can real
progress be made?
- These concerns were amplified
in a lively discussion that
followed:
- The approach is too cautious;
there is too much sensitivity to
the interests of the governments;
- The Guide seems incomplete,
missing many institutional
details, in particular what role
civil society itself plays in the
country;
- Expecting staff to assess the
"legal status" of CSOs is a
concern in countries where civil
society has limited rights or
standing;
- In assessing the legitimacy of
CSOs, staff should be aware that
governments sometimes create
artificial CSOs;
- Fund staff should not let
concerns about resource costs
overwhelm their intention to
pursue dialogue; staff need to
find ways of making the time,
giving up other activities if
necessary;
- Dialogue often simply does not
exist. People still have the sense
that nobody is listening to their
concerns, for example in the
recent controversy over
electricity prices in Argentina.
- The Fund should not reinvent
the wheel; it should draw on the
experience and expertise of other
international organizations, in
particular, the World Bank and the
United Nations.
Back to Table of
Contents
Letters from
the Field
A Visit to Southern Ecuador
David Yuravlivker, Resident
Representative, Ecuador
I joined Mac Benjamin, the World
Bank representative in Ecuador, for
a half-day meeting with civil
society and local authorities in the
southern province of Loja. This was
one of a series of meetings
organized as a follow-up to the
consultations with civil society
that took place in preparation for
the recent Country Strategy Paper.
The first part of the discussion
focused on World Bank strategy in
Ecuador, and the second part on the
economic situation and prospects.
Some 30 people attended, among them
representatives of indigenous
communities in the province.
Issues raised by the audience
included: the social costs of
migration to other countries; the
lack of access to credit by
communities and businesses; the
increase in poverty and its
relationship to dollarization; the
apparent conflict between
multilateral financial institutions
and the social movements; the
perceived failure of the
multilaterals to listen to citizens
at the grass roots; and the need to
ensure that the poor do not always
bear the weight of adjustment
programs.
I described the numerous
discussions we had had with
indigenous leaders at the national
level, and pointed out that we are
open to views at the local level.
Then I outlined our program and
stressed that most of its components
addressed their very concerns
head-on, including anti-corruption
measures aimed at the Customs Office
and the Agencia de Garantia de
Depositos (Deposit Guarantee
Agency). There was also a question
about the cooking gas subsidy, which
prompted an explanation of our
argument in favor of transparent
subsidies to people rather than
regressive subsidies targeted at
commodities. The audience showed
great interest in our approach.
In the evening, we had dinner
with the Mayor of Loja and with the
Rector of the Universidad Técnica
Particular de Loja. The Mayor is
very dynamic, has a nationwide
reputation, and has been re-elected
several times. He puts great stock
in environmental protection, an
approach reflected in the clean and
well-kept appearance of the town.
Roughly speaking, one third of
city's revenues come from local
taxes, one-third from central
government transfers, and the rest
from external sources. His main
complaints are that the central
government is behind in transfer
payments, and that the major cities,
Quito and Guayaquil, take what they
want, leaving the rest of the cities
to struggle for what is left.
All in all, the visit was
productive. In particular, it was
very useful to participate in the
forum organized by the World Bank,
which has an ongoing dialogue with
civil society, to have the
opportunity to explain our program
and to hear directly from people at
the local level. Townspeople
appreciated the Fund visiting the
city to hear from them and hoped to
have other opportunities to continue
the dialogue with us.
Back to Table of
Contents
A Meeting with Guinea's
Private Sector
Dennis Jones, Resident
Representative, Guinea
I met the Conseil National du
Secteur Privé en Guinée (National
Council of the Private Sector in
Guinea) on August 21, together with
the Canadian Ambassador, to explain
in general terms the role of the IMF
and to discuss the Fund's current
relationship with Guinea and recent
policy recommendations. The main
issue was the fact that the current
economic program is off-track. The
exchange was lively and open and the
executives gave many examples of the
difficulties they face. We, in turn,
had the opportunity to clarify
important aspects of the IMF's role,
such as the fact that we do not give
direct budget support to governments
or lend money directly to private
enterprises, and to make the
distinction between the IMF and the
World Bank. This meeting will be
followed by regular meetings of a
similar kind, perhaps every three
months. To help get a better
understanding of the IMF's
activities, I also held a roundtable
meeting with the local and
international press in Guinea on
August 12.
The meetings with the press and
with the industrialists were fully
and fairly reported in the local
media. Visiting IMF missions usually
meet a range of civil groups, most
recently during the Article IV
consultation in May 2003. My
intention is to meet with a broad
range of civil groups in the coming
months.
In an effort to make material
about the IMF and Guinea more
accessible, the resident mission in
Guinea has launched a new web site (www.imf.org/conakry).
It contains some IMF documents and
other information in both English
and French. The existence of the web
site has been made known to a wide
range of groups (donors, government
agencies, civil organizations). The
feedback so far has been positive.
Back to Table of
Contents
Sri Lankan Civil Society
Speaks Out
Jeremy Carter, Senior Resident
Representative, Sri Lanka
As part of the office dialogue
with civil society, I met 16
representatives from local community
groups on July 29 in Colombo in
advance of the Article IV mission in
August. The civil society
representatives raised questions
about the way Fund programs are
designed and carried out, and about
their own government's handling of
economic policy. These are
politically charged issues, but the
discussion was friendly.
Among the participants were
critics of the government's
development strategy, as laid out in
"Regaining Sri Lanka", which has
been endorsed by the IMF and World
Bank as an appropriate basis for
Fund/Bank lending operations. In
particular, Sarath Fernando of the
Movement for National Land and
Agricultural Reform argued that the
plan would widen the gap between
rich and poor, and promote migration
to cities by the rural poor. He
added that the strategy's authors
had not been responsive to
suggestions from critics.
From the Fund side, I explained
that Fund support for the strategy
as a whole did not imply agreement
with every word. I also noted that
previous anti-poverty strategies
adopted by both the current and
previous governments and endorsed by
the Fund had achieved positive
results. To a related point raised
by Sarath Iddamalgoda of Janawa Bode
Kundara (Public Awareness), who
criticized working and living
conditions in free trade zones, I
noted that the IMF disapproved of
labor violations and was encouraging
the government to work with the
unions in their plans to revise the
labor market legislation.
Gloria De Silva of the Center for
Family Services criticized
parliamentary oversight of economic
policy as weak. I said the Fund
welcomes greater participation by
Members of Parliament, but agreed
that currently there was only
limited interaction. Responding to
related questions about
conditionality in IMF-supported
programs, and about the quality of
government data, I said I was
reasonably assured that government
figures are accurate. I noted that
CSOs are encouraged to contact the
IMF if they have any questions about
the data being used to monitor the
Fund-supported program. As for loan
conditions, I noted that all
governments that borrow from the
Fund commit themselves to achieving
certain numerical targets and to
adopting policies that are key to
achieving the overall objectives of
their economic program.
Nevertheless, these targets were
more signals than strict unbending
tests and were aimed at allowing the
country government and the Fund to
monitor and, if necessary, adjust
policies.
I welcomed the continued flow of
ideas from civil society, stressing
that the Fund is willing to
incorporate civil society's ideas in
future lending programs, although
there would be no guarantee of
blanket acceptance of such
proposals. But even those that are
rejected enrich the policy debate.
In that vein, the participants were
invited to meet the IMF mission in
August to continue the dialogue (a
meeting did take place), noting that
similar meetings were also being
arranged with the unions.
Back to Table of
Contents
Bulletin Board
If you want to be notified when
new documents are published on the
IMF website, please sign up for
email notification through our
website notification system.
Other recent meetings between
IMF staff and CSOs
- On August 19, Mark Plant,
Advisor, Policy Development and
Review Department (PDR), attended
an international PRSP-civil
society seminar in Copenhagen. The
seminar was sponsored by the
North-South Coalition of
Denmark and brought together
representatives of Nordic CSOs and
their partners/affiliates in
Africa, Asia and Latin America.
The seminar participants exhibited
a growing impatience with the PRSP
process and IFI promises of
"eventual change": CSOs claimed
they had heard such refrains for
three years, but in fact saw
little change.
- On August 28, Godfrey Kalinga,
Division Chief, African Department
(AFR) and the World Bank HIPC
manager, Vikram Nehru,
participated in a debate on
Africa's debt with Njoki Njehu of
50 Years is Enough Network and
Albert Gyan Jr., a consultant on
economic and international
development issues. The event was
organized by afrikafé, a
Washington-based organization of
African professionals and
expatriates.
- On September 5, 2003, the
New Rules for Global Finance
Coalition and the Friedrich
Ebert Foundation organized a
panel discussion Democracy and
Development: Proposals for IMF and
World Bank Governance Reform,
held at the World Bank. The debate
was a follow-up to a discussion in
March, which the IMF hosted. IMF
Executive Director Guillermo Le
Fort (Chile) was among the
speakers.
- On September 9-10, Kristin
Roesser, EXR, and Axel Palmason,
UN Office, attended the UN's
56th Annual Department of Public
Information/NGO Conference
entitled Human Security and
Dignity: Fulfilling the Promise of
the United Nations in New
York. The gathering attracted over
2000 representatives from more
than 700 NGOs.
- On September 11-12, the IMF
and the World Bank organized a
Workshop on Debt
Sustainability in Low-Income
Countries at IMF
headquarters in Washington.
Participants included policy
makers from donor and recipient
countries and multilateral
institutions, as well as CSOs,
academia, and think tanks. The
discussion—as
well as earlier sessions held in
Paris, Berlin, and Accra during
May-June—informed
the joint Bank-Fund paper on the
policy implications of debt
sustainability in low-income
countries.
- Axel Palmason, UN Office
participated in a September 18
roundtable discussion with
UN-NGOs in New York on ways to
finance the Millennium Development
Goals (MDG) entitled Feasible
Additional Sources of Finance for
Development. The specific
issues under discussion included
the proposed International Finance
Facility, SDRs, and international
taxation and tax cooperation. Mr.
Palmason tried to frame the issue
in the context of the broader
two-pillar approach from
Monterrey, highlighting the need
for an underlying balance between
domestic policies, aid, trade, and
debt relief. He also participated
in a conference on the role of
CSOs in conflict prevention, which
considered the role of development
assistance, and a briefing on the
political economy of armed
conflict.
Back to Table of
Contents
IMF Staff News and
Organizational Changes
- Timothy Geithner, Director,
PDR will leave the IMF in November
to become
President of the Federal Reserve
Bank of New York. Mr. Geithner
joined the IMF in 2001 from the
U.S. Treasury Department, where he
had served in various positions,
including as Undersecretary for
International Affairs. IMF
Managing Director Horst Köhler
said that an appointment to fill
Mr. Geithner's position will be
made in due course.
-
Shigemitsu Sugisaki, Deputy
Managing Director of the IMF, will
leave his position around the
beginning of 2004. Mr. Sugisaki
joined the Fund as Special Advisor
to the Managing Director in August
1994 and was appointed Deputy
Managing Director in February 1997
for an initial term of five years.
He was appointed to a second term
in February 2002. Takatoshi Kato,
a Japanese national, has been
announced as his successor.
The former Japanese Vice Minister
of Finance for International
Affairs is currently Advisor to
the President of Bank of
Tokyo-Mitsubishi and a Visiting
Professor at Waseda University.
- Effective November 1, the IMF
has
undertaken a consolidation of
its area departments, reducing the
number from six to five. The
organizational changes follow an
internal review of how best to
structure and manage the Fund's
area departments. In particular,
in light of the changing nature of
its work, the European II
Department (EU2), which comprised
countries of the former Soviet
Union, has been dissolved. Seven
countries in EU2 have moved to
the European I Department, which
has been renamed the European
Department (EUR). The other eight
EU2 countries have moved to the
Middle Eastern Department (MED),
which has been renamed the Middle
East and Central Asia Department
(MCD). Michael Deppler, who
previously headed EU1, is now
Director of EUR. On September 1,
Mohsin Khan, former Director
of the IMF Institute, moved to MED
as Associate Director, and will
assume the title of Director, MCD,
upon the retirement in December of
the present Director,
George Abed.
John Odling-Smee, who has led
EU2 since its inception, has
announced his intention to retire
in early 2004.
Back to Table of
Contents
Selected Speeches
-
Address to the Board of Governors
of the Fund by Horst Köhler,
Chairman of the Executive Board
and, Managing Director of the
International Monetary Fund,
Dubai, September 23, 2003
-
Can the IMF Contribute to the
Promotion of the MDGs Relating to
Gender Equality? By Peter S.
Heller, Deputy Director, Fiscal
Affairs Department, Meeting of
High-Level Women in International
Finance, Economics, and
Development, Dubai, September 20,
2003
-
The IMF's Views and Actions in
Dealing with its Poorest Member
Countries, by Flemming Larsen,
Director of IMF's Offices in
Europe, Introductory Remarks at
World Council of Churches-World
Bank-IMF Meeting, Geneva,
September 11, 2003
-
Address at the Fifth WTO
Ministerial Conference, by
Anne Krueger, First Deputy
Managing Director, Cancún, Mexico,
September 10, 2003
-
Dismantling Barriers and Building
Safeguards: Achieving Prosperity
in an Age of Globalization,
Heinz Arndt Memorial Lecture, by
Anne O. Krueger, First Deputy
Managing Director, Canberra,
Australia, August 13, 2003.
Back to Table of
Contents
Selected Publications
-
Report of the IMF Managing
Director to the International
Monetary and Financial Committee
on the IMF's Policy Agenda,
September 16, 2003
-
Poverty Reduction Strategy Papers—Progress
in Implementation, prepared by
the Staffs of the IMF and the
World Bank, September 12, 2003
-
Poverty Reduction Strategy Papers—Detailed
Analysis of Progress in
Implementation, prepared by
the Staffs of the IMF and the
World Bank, September 15, 2003
-
Update on the Financing of PRGF
and HIPC Operations and the
Subsidization of Post-Conflict
Emergency Assistance, prepared
by the Finance Department (in
consultation with the Legal and
Policy Development and Review
Departments), August 18, 2003
-
Heavily Indebted Poor Countries (HIPC)
Initiative—Status
of Implementation, prepared by
the Staffs of the IMF and World
Bank, September 12, 2003
-
Role of the Fund in Low-Income
Member Countries over the Medium
Term—Issues
Paper for Discussion, Prepared
by the Staff of the Policy
Development and Review Department,
July 21, 2003
-
Fiscal Sustainability in African
HIPC Countries: A Policy Dilemma?
By Annalisa Fedelino, Alina Kudina,
Fiscal Affairs Department, Working
Paper No. 03/187
-
The WTO Promotes Trade, Strongly
but Unevenly, by Arvind
Subramanian, Shang-Jin Wei,
Research Department, Working Paper
No. 03/185
-
Debt Relief, Additionality, and
Aid Allocation in Low Income
Countries, by Robert K Powell,
African Department, Working Paper
No. 03/175
-
Reviewing the Process for
Sovereign Debt Restructuring
within the Existing Legal
Framework, prepared by Policy
Development and Review,
International Capital Markets, and
Legal Departments (in consultation
with other Departments), August 1,
2003
-
Hierarchy and Authority in a
Dynamic Perspective: A Model
Applied to Donor Financing of NGO
Proposals, by Boriana
Yontcheva, IMF Institute, Working
Paper 03/157
-
What Would a Development-Friendly
WTO Architecture Really Look Like?
By Aaditya Mattoo, Arvind
Subramanian, Research Department,
Working Paper 03/153
-
Addressing the Natural Resource
Curse: An Illustration from
Nigeria, by Xavier Sala-i-
Martin, Arvind Subramanian,
Research Department, Working Paper
No. 03/139.
Back to Table of
Contents |