The food crisis in Southern Africa
The food shortages in southern Africa represent
a human tragedy that calls for a committed
response from the international community. One
country that has already paid a heavy price is
Malawi, and urgent action is still needed to
prevent more starvation. The authorities are
working together with the international donor
community to flesh out an appropriate response and
the IMF is fully supportive of these concerted
efforts.
In the midst of this tragedy, Malawi has found
itself at the center of a controversy because of
the government's sale of almost all of the
country's food reserves last year. As the issue
has gained attention, several allegations have
been directed at the IMF:
- The Fund ordered, forced or advised Malawi
to sell off its reserves;
- The sales were required so that Malawi could
pay off its foreign debt, or the debt of an
agency that controls the food reserves; and
- the IMF demanded that Malawi reduce spending
on poverty-reduction efforts in order to buy
food.
These allegations are simply wrong.
The roots of the food crisis in Malawi are very
complex. The causes range from the failure of the
government's early warning systems for crop
shortfalls; to over-reliance on maize production;
to cutbacks in farmers' plantings and harvests as
government interventions pushed down the maize
price; to transportation bottlenecks in Mozambique
that have slowed the flow of food to Malawi's
hungry; to uncooperative weather.
The food crisis should be seen in the context
of the government's food security policy launched
in 2000, which was based on a
government-commissioned study funded by the
European Commission. The policy had four main
pillars: a) an early warning system to ensure
timely warning of any looming shortages; b) a
physical buffer stock of between 30,000 and 60,000
metric tons of maize for short-term emergencies;
c) sufficient foreign exchange reserves at the
central bank to ensure funding to purchase grain
in the event of a larger shortfall; and d) social
safety net programs to meet the food needs of the
poor.
In particular, the recommendation related to
the buffer stock implied a substantial reduction
of the end-1999 stock of 167,000 metric tons. The
study argued that such large reserves were likely
to go to waste because the maize lasts only a few
years in storage and is also very costly to
maintain (absorbing funds equivalent to one-fifth
of Malawi's annual spending on health programs).
This was a particularly critical consideration for
the government because a large stock would draw
limited resources from other programs, including
the areas that are crucial to poverty reduction
programs such as health, education, and
agricultural extension
What was the IMF involvement?
In December 2000, the IMF Executive Board
approved a three-year Poverty Reduction and Growth
Facility (PRGF) arrangement and a decision point
under the enhanced HIPC Initiative, and endorsed
Malawi's interim poverty reduction strategy paper.
The main objective of the program with the IMF was
to achieve sustainably higher economic growth to
make a sizable reduction in poverty. All IMF
advice has been guided by that objective.
The IMF had no role whatsoever in the
government-commissioned study of food security.
In Malawi's program with the IMF, the
government publicly expressed—in its Letter of
Intent of December 2000 (Section
F in the document) its intention to follow the
buffer stock element of the food security
strategy, which meant keeping up to 60,000 tons in
reserve.
The IMF did not at any time insist that
Malawi reduce its food stocks as a condition of
Fund lending. During 2001, the government
decided to sell off almost all of its maize
reserves, leaving far less than the targeted level
of reserves, apparently because the government
assumed that it could replenish its stores from
the approaching harvest. However, crop estimates
were wrong, and crop production turned out to be
much lower than expected. The early warning
systems failed to alert the authorities or the
international community to the looming shortages.
The sales have been followed by media allegations
of corruption.
The Fund had no role in the government's
decision to sell off far more than the amount
recommended in the EC-funded study and in the
Letter of Intent. At no time did the IMF
"pressure" Malawi in any fashion, or advise
Malawi, to sell its grain reserve to pay its
debts. The December 2000 Letter of Intent does not
mention debt in the context of grain sales, and
Fund officials have not drawn that link during
meetings with Malawian officials at any level.
At no time has the IMF demanded that Malawi
pay for food imports by cutting spending of any
sort.
The IMF has publicly stated that any emergency
funds needed to alleviate the impending food
crisis should be made available through the budget
without any offsetting cuts. In any case, required
food imports are likely to be paid for by donors
and not by the Malawi government.
The government continues to support extensive
social safety net programs, including subsidies
targeted at the poor that cover food and some
health, education and agricultural-input programs.
The IMF supports this policy.
Malawi's Poverty Reduction and Growth Facility
(PRGF) loan from the IMF was suspended during 2001
because of the government's inability to bring
under control wasteful spending—especially on
state-owned companies—that was causing interest
rates to rise to high levels and taking resources
away from the poor. The IMF's portion of the debt
relief program was also suspended. However, the
government now is working closely with the Fund to
bring that spending under control, and it is hoped
that the PRGF and debt relief will be restored
soon.
What needs to be done?
A quick and coordinated response by the
government and the donor community is now needed
to ensure that Malawi's population will not suffer
further later this year. First and foremost, the
estimate of the food deficit during the 2002/03
growing season will have to be firmed up quickly
to ensure that sufficient food will arrive on
time; it is expected that estimates from a WFP/FAO
mission and a household survey financed by CIDA
will become available soon. Government
interventions in the past may have contributed to
the current crisis by eroding incentives for
producing food. Therefore, appropriate delivery
mechanisms are critical so as not to depress food
production in the coming years. Food imports are
likely to be financed by donors, and the IMF has
indicated publicly that any emergency funds needed
for food imports should be covered by the budget
without any offsetting cuts.
The government has acknowledged the failure of
the food security strategy and has publicly
announced that it will embark on a comprehensive
review to avert another food shortage in the
future.
The IMF has met with NGOs, both in Washington
and in Malawi, to clarify its position and to
discuss its advice to the Malawian authorities. It
will continue to engage with civil society on how
best to serve the interests of the people of
Malawi.
More documents on Malawi and the IMF
IMF establishes African Regional Technical
Assistance Centers
On his
third visit to Africa since becoming IMF
Managing Director, Horst Köhler signed agreements
to establish two African Regional Technical
Assistance Centers (AFRITAC). The Center
Abidjan will serve West African countries,
while the Center in
Dar es Salaam will meet the training needs in
East Africa.
Both centers are expected to become operational
later in the year and, if the concept proves
successful, three more centers will be established
to cover the rest of sub-Saharan Africa. Through
the centers, modeled on the IMF's regional
technical assistance centers in the Pacific and
the Caribbean, the IMF will provide assistance
with a team of resident experts, supplemented by
short-term specialists, as well as through
in-country workshops, professional training, and
regional courses.
The Centers are part of the IMF
Africa Capacity Building Initiative, whose
goal is to strengthen the capacity of African
countries to design and implement their
poverty-reducing strategies, as well as to improve
the coordination of capacity building technical
assistance in the Poverty Reduction Strategy Paper
(PRSP) process. It aims to increase the volume of
capacity building assistance from the IMF to
Africa in the IMF's core areas of expertise. The
centers are also a contribution by the IMF to the
New Partnership for Africa's Development (NEPAD).
The HIPC Initiative—Status of
implementation
In a joint report released in April, the IMF
and the World Bank laid out the accomplishments of
and the challenges facing the HIPC Initiative. The
report,
Status of Implementation, is prepared every
six months for discussion during the institutions'
Spring and Annual Meetings. Since September, four
countries—Mozambique, Tanzania, Burkina Faso and
Mauritania have reached their completion points,
while three—Ethiopia, Ghana and Sierra Leone -
have reached the decision points.
But the report warned that "fewer countries
than expected reached their completion points"
because countries have required more time than
anticipated to develop poverty reduction
strategies and some countries have experienced
delays in implementing key macroeconomic or
structural reform policies.
The document also said that the deterioration
of the global economic environment - especially
slower economic growth and weaker commodity prices
- has made it more difficult for countries to
achieve and maintain debt sustainability, with
"virtually all HIPCs being heavily dependent on
primary commodities for their exports." While
emphasizing the need for all HIPCs to pursue
prudent debt management policies as a means of
achieving long-term debt sustainability, the
report also stressed that the Initiative provides
for the possibility of additional debt relief at
the completion point in exceptional cases where
external factors have caused fundamental changes
in a country's economic circumstances. Burkina
Faso was the first country to be provided with
such additional debt relief (see separate story).
Countries off-track
The paper notes that in a few countries
(Guyana, The Gambia, Guinea, Nicaragua,
Guinea-Bissau, Malawi, Zambia) were off-track with
their Fund-Bank supported programs. As of
mid-June, the status of these countries was as
follows:
Guyana
Authorities are making progress towards putting
in place a new three-year PRGF-supported economic
program covering 2002-05 that is consistent with
their PRSP. A satisfactory track record of
performance under the new PRGF program is one of
the conditions for reaching the HIPC completion
point. Progress in fulfilling most of the other
floating completion point conditions is expected
over the next few months. Assuming all the pending
conditions are met, the completion point could be
reached by end 2002.
The Gambia
With regard to The Gambia, the program was not
off track as such: the main problems were the
delayed preparation of the PRSP and other
outstanding issues that delayed conclusion of the
negotiations. The April/May 2002 mission reached
understandings with the authorities on a new
three-year PRGF arrangement. The PRSP was sent to
the Bank and Fund in May 2002. We now expect to go
to the Board on July 10, with the request for the
PRGF, supported by the full PRSP and a joint staff
assessment (JSA) of the latter.
The Gambia has been receiving interim debt
relief under the enhanced HIPC Initiative since
2001 and has requested the Fund to continue
providing such relief in 2002. Debt relief is
provided through arrangements that permit a
country to keep part of the debt payment due to
creditors and use it for poverty-reducing
expenditure.
Guinea-Bissau
The PRGF-supported arrangement for
Guinea-Bissau, approved by the IMF's Executive
Board on December 15, 2000, went off track at
end-2000 as a result of large unauthorized
expenditures and a breakdown in financial
controls. The reestablishment of sustainable
government finances has remained an elusive goal.
During 2001, the IMF, along with the World
Bank, the EU and bilateral supporters, provided
technical assistance in order to strengthen
financial discipline and ensure that resources are
used according to priorities. The Fund staff
worked with the authorities to establish a
short-term macroeconomic program for the second
half of 2002, in order to help Guinea-Bissau move
back towards a sustainable financial position. The
short-term program introduced a treasury cash-flow
plan, measures to regain control of budget
implementation, strengthen tax and customs
administration and avoid the further accumulation
of domestic arrears.
The Guinean authorities have not found it easy
to restore government finances to a sustainable
position. In March 2002, the Fund staff visited
Bissau to discuss economic and financial policies
with the authorities and reviewed steps that could
be taken to address continuing problems. As of
mid-June 2002, however, the National Assembly was
still debating the budget for 2002.
Honduras
The PRGF program went off track in 2001 as
large fiscal slippages occurred during the
transition to the new administration that took
office in late January 2002. Negotiations on a
PRGF program for 2002 have not been completed
because of a projected deterioration in the fiscal
stance for 2002-03. The authorities need to
strengthen the fiscal policy stance through
actions designed to revamp tax collections,
reverse an upward trend in the government's wage
bill relative to GDP starting this year, and
establish a sustainable wage policy framework. The
authorities have agreed to work out a revised
fiscal strategy with a view of resuming
discussions on the PRGF program possibly by July.
Malawi
The PRGF program went off track shortly after
approval in December 2000. Due to fiscal
slippages, in particular overspending on
nonpriority items, the review could not be
completed. Thus, the IMF has not credited the HIPC
Trust Fund account for 2002. However, all other
creditors—accounting for well over 90 percent of
the total relief—continue to provide interim debt
relief under the HIPC Initiative. The IMF interim
debt relief will be made available upon completion
of the first review and no money will be lost for
Malawi.
Under the PRGF arrangement, agreement on the
way forward has been reached in March 2002. Malawi
has started to contain expenditure and a decisive
fiscal adjustment will be implemented with the
2002/03 budget. After successfully establishing a
track record of policy performance through
September, the staff expects to recommend to the
Executive Board before year-end completion of the
first review. The authorities, the staff, and the
international community are currently working on a
concerted response to the impending food shortages
expected for later this year
Nicaragua
After reaching the HIPC decision point in
December 2000, Nicaragua's PRGF arrangement went
off track. However, a mission initiated
discussions on a new three-year PRGF arrangement
in March 2002 and reached a preliminary agreement
on the main elements of the first year program,
which would cover July 2002-June 2003. Actions
agreed to be taken include the approval of a
modification to the 2002 budget, a tax reform
aimed at improving the efficiency and equity of
the tax system, and a recovery plan for assets
acquired from intervened banks. The authorities
have begun to prepare a progress report on their
PRSP, which was originally presented to the Boards
of the Fund and the Bank in September 2001.
Discussions are expected to continue in the
weeks ahead and the new program is expected to be
presented to the IMF Board during the third
quarter of 2002. Nicaragua has begun to receive
interim HIPC assistance form the World Bank, IDB
and CABEI. Following the approval of a program
with the IMF, it would be expected to receive
interim assistance from the Fund and Paris Club
members.
Zambia
On May 29, the IMF completed the fourth review
of
Zambia's performance under an economic program
supported by the Poverty Reduction and Growth
Facility (PRGF), and agreed to increase the
amount of potential access to IMF resources over
the remainder of the program. As a result, Zambia
will be able to draw up to US$64 million from the
facility immediately, and have potential access to
US$159.8 million in the course of subsequent
program reviews scheduled into February 2003, an
increase of about US$31 million.
The IMF also approved the release of US$150.7
million in 2002 as additional interim assistance
under the enhanced HIPC Initiative. This
assistance represents nearly 70 percent of
Zambia's principal obligations to the IMF in 2002,
and brings total assistance by the IMF under the
Initiative to about US$301.5 million.
Other HIPC news:
Burkina Faso to receive additional debt
relief
The IMF and the World Bank agreed last April to
award
additional debt relief to Burkina Faso under
the HIPC Initiative in light of external factors
that negatively affected the country's exports.
The Boards of the IMF and Bank agreed that
Burkina Faso would require exceptional debt
relief, or "topping-up", to achieve debt
sustainability, and endorsed an additional US$129
million in net present value terms of debt relief.
The Bank and the Fund said that the external
factors included falling world cotton
prices—resulting in part from heavy subsidies in
industrialized country markets—political and
economic events in neighboring countries, and crop
damage due to agricultural parasites.
With this additional treatment, the total
nominal debt service relief provided under the
HIPC Initiative is about US$930 million.
Mauritania becomes sixth country to reach
completion point
On June 19, the IMF and the World Bank
announced that
Mauritania had reached its completion point
under the Enhanced HIPC Initiative.
Mauritania thus became the sixth country to reach
this point, joining Bolivia, Burkina Faso,
Mozambique, Tanzania and Uganda.
Debt service relief under the enhanced HIPC
Initiative from all of Mauritania's creditors will
amount to approximately US$1.1 billion over time
(US$622 million in net present value [NPV]
terms).As a result of HIPC assistance, the net
present value of Mauritania's total external debt
is reduced by some 50 percent, providing a good
basis for long-term debt sustainability. This,
however, will require continued efforts to monitor
the debt level and to apply prudent debt
management policies, the IMF and the Bank said in
a statement.
Also available on the IMF's website:
The Enhanced HIPC Initiative and the Achievement
of Long-Term External Debt Sustainability
Africa needs better trade opportunities to
fight poverty—Köhler
During his visit to Africa, IMF Managing
Director Horst Köhler repeated a message that rich
countries have heard from him often in recent
months: open your markets to the products of
Africa and other developing nations. In
particular, he emphasized the need to increase
access to developing countries' agricultural
exports, including through reduction in industrial
country subsidies.
"It is no longer possible to sustain the
agricultural policy in the advanced countries,
which de facto means closed markets and $300
billion of trade-distorting policies," Mr. Köhler
told a news briefing upon a day of meetings in his
first stop, Dar es Salaam. "If this is not going
to change, all our efforts against poverty will
remain not satisfactory," he added.
In Ouagadougou, Köhler told cotton producers
and business leaders: "I know that the United
States alone is spending $2 billion (annually) for
its cotton subsidies, more than the total
production of sub-Saharan Africa of cotton and the
same goes for sugar in the European Union—they are
spending more than €2 billion in Europe for sugar
subsidies. I think this is something perverse and
we need to change it. If we are not able to give
you better trade opportunities then maybe the
fight against poverty is lost from the beginning."
Köhler said developed countries should also cut
tariffs on finished goods such as clothing, or
processed foods like chocolate. Only then, he
said, could poor countries really improve their
own economies and become less dependent on outside
help.
In Ghana, Köhler said in a speech that the
recently passed U.S. farm bill, which increases
domestic subsidies for the agricultural sector,
was a setback to the battle against poverty.
The message was also delivered to the OECD
agricultural ministers meeting in Paris in
mid-May.
In a joint statement with the heads of the WTO and
the World Bank, Köhler asked how leaders "in
developing countries or in any capital could argue
for more open economies if leadership in this area
is not forthcoming from wealthy nations."
Köhler, Moore and Wolfensohn said that "any
increase in protectionism by any country is
damaging. Such actions will hurt growth prospects
where fostering growth is most essential. And they
are sending the wrong signal, threatening to
undermine the ability of governments everywhere to
build support for market-oriented reforms ...
Prospects for reform of agricultural support
policies and textiles regimes, toward
interventions that are less damaging to the
economic opportunities of the poor, are
particularly important."
But the developing countries can also do much
to help themselves. The heads of the international
financial institutions also added that
"south-south trade in the 1990s grew faster than
world trade and now accounts for more than a third
of developing country exports. Yet the barriers to
this trade are higher still than to trade with
industrial countries. Most of the benefits of
liberalization derive from action at home. Sound
trade policies are rarely contingent on the
policies of others."
Uganda: health spending, aid flows, and the
IMF advice
The recent public debate on aid flows to Uganda
has focused on speculation about the advice
offered by the IMF to the government. In an open
letter to the authorities, Professor Jeffery Sachs
wrote that he had heard, but had not verified,
that the Fund warned against accepting new donor
grants for health expenditures, supposedly arguing
that to do so would lead to an undue appreciation
of the currency.
In a letter to Eurodad's PRS-Watch dated June
7, the IMF denied this rumor, stating that it is
not true that Uganda may have to refuse aid for
health or any other poverty-eradication programs
in order to adhere to IMF-imposed guidelines.
"The government's priority—a priority that is
shared by the IMF—is to increase the availability
of domestic and foreign resources to reduce
poverty. Indeed, IMF staff have suggested
restructuring public spending so as to accommodate
higher expenditures for important social and
economic sectors," External Relations Department
Director Thomas Dawson said.
"In the specific case of Uganda, given that the
aid flows in question are to be used for top
priority spending such as imports of life-saving
drugs and other essential medical supplies, we do
not see any adverse effects on the macro economy.
Moreover, even if these aid flows placed pressure
on the exchange rate and the competitiveness of
the economy, these effects could be minimized
through monetary and exchange rate policies."
In a meeting with NGOs in Washington on June
18, IMF mission chief Godfrey Kalinga again stated
that the amounts of aid and increases in health
spending currently under discussion in Uganda
would have minimal macroeconomic impact. He said
there is a level at which the management of aid
flows, and their impact on the economy, needs to
be monitored, and the current mission to the
country is working very hard at trying to fixing
that limit with the government. The impact of the
flows would depend. Among other things, on the
size of the flows, the import composition of the
use of these flows, and whether these flows are
spent effectively and productively.
The broad discussion on these issues, which is
closely linked to the issue of fiscal flexibility
in PRGF-supported programs, will undoubtedly
continue, and the Fund will continue to meet and
discuss its policy with civil society
representatives.
Krueger outlines new details of IMF's
proposal for a sovereign debt restructuring
mechanism
In a speech in Washington on June 6, IMF First
Deputy Managing Director Ann Krueger detailed the
progress made by the IMF on a two-track approach
to improve sovereign debt restructuring. The
approach was endorsed by the International
Monetary and Financial Committee at its April
Meetings.
The first track involves more ambitious use of
collective action clauses in sovereign bond
contracts. The second - and complementary - track
involves creating a statutory mechanism that can
help secure more orderly and timely restructuring
of unsustainable sovereign debts.
Ms. Krueger went on to clarify one important
issue that has stirred much debate since her first
speech on the issue last November: the role of the
IMF. Many commentators, while welcoming the
discussion around the need for an orderly and fair
process to restructure debts, have strongly
objected to a central role for the IMF in the
whole mechanism.
Ms. Krueger said that a treaty obligation -
probably achieved through an Amendment of the
IMF's Articles of Agreement (the IMF's
"constitution") - would empower a super-majority
of creditors to reach agreement with the debtor
and bind in the rest. But, she emphasized, the
amendment would be used only as a tool to empower
the creditors and debtor, not as a way to extend
the IMF's legal authority. The Fund would only
influence the process as it does now, through its
normal lending decisions.
She also outlined what shape a dispute
resolution forum could take.
She went on to conclude: "In a world in which
sovereign borrowers have diffuse and diverse
creditor bases, we need a way to overcome the
coordination and collective action problems that
stand in the way of timely and efficient
restructuring. For both the contractual and
statutory approaches, that means addressing the
problems created by the diversity of legal
jurisdictions in which creditors can seek
repayment. We believe that a dispute settlement
forum - small in size, limited in role, and
demonstrably independent in its membership and
operation - is the best way to achieve this. To
help avoid chaotic defaults or expensive bailouts
in the future, that is surely a price worth
paying"
IMF staff have met with NGOs on several
occasions to discuss Ms. Krueger's proposal.
Public debates were organized in New York and
Monterrey, Mexico, in the context of the Financing
for Development Conference, while in Washington DC
meetings took place at the time of the Spring
Meetings and on May 13. The discussion focused
mainly on the role of the Fund and on the
so-called Chapter 9 proposition—the chapter in the
U.S. bankruptcy code that applies to governmental
organizations like municipalities and that seeks
to protect the rights of taxpayers and employees
to participate in the insolvency process.
Recently published:
A New Approach to Sovereign Debt Restructuring
Communiqué of the International Monetary and
Financial Committee, April 20, 2002
IMF co-sponsors CIS-7 Initiative
The IMF is co-sponsoring
an international initiative aimed at reducing
poverty, promoting economic growth, and reducing
debt to sustainable levels in seven countries of
the Commonwealth of Independent States (CIS).
Other sponsors include the World Bank, the Asian
Development Bank, and the European Bank for
Reconstruction and Development. Assistance under
the CIS-7 initiative will be provided through
loans, grants, debt restructuring, and debt
relief. Support will be conditional on the seven
countries adopting sound economic policies.
The CIS-7 Initiative was prompted by the
realization that the challenges posed by
transition in Armenia, Azerbaijan, Georgia, the
Kyrgyz Republic, Moldova, Tajikistan, and
Uzbekistan have been underestimated. Also, while
the CIS-7 countries have made good progress toward
establishing democracies and market economies,
reforms have not always been effectively
implemented. As a result, living standards have
declined sharply in all seven countries, with
nearly 20 million people now living in extreme
poverty.
In recognition of this situation,
representatives of the CIS-7 governments, creditor
countries, and four international financial
institutions agreed, at a seminar in London in
February 2002, to make new efforts to increase
economic growth and reduce poverty in the CIS-7
countries. The CIS-7 Initiative was officially
endorsed at a ministerial meeting in Washington,
D.C. on April 20, 2002.
Assistance under the initiative will be
provided under existing policies and frameworks.
In particular,
- the Paris Club countries will consider
requests for debt relief as needed;
- debt relief under the HIPC Initiative might
also be a possibility, although only one or two
of the CIS-7 countries presently appear to
qualify, and only for small benefits;
- consultative group meetings will be
organized to mobilize donor support;
- Aid effectiveness should be enhanced,
possibly by making use of the PRSP framework to
ensure greater coordination among donors;
- existing IFI programs with CIS-7 countries
should continue, both as a means for the
countries to demonstrate greater ownership of
reforms and to facilitate a greater flow of IFI
resources in the future;
- major trading partners should remove
barriers to exports from the CIS-7 countries.
Field reports: IMF staff interaction with
civil society
Nicaragua—Dialogue on the new PRGF
In Nicaragua, the government, National
Assembly, civil society, syndicates and political
parties maintain frequent and visible contact with
the Fund office. The press provides an aggressive
coverage of the meetings with the various
stakeholders.
Given that the Fund is currently negotiating a
new 3-year PRGF with the new government that took
office in January 2002, public interest is high in
all aspects of economic decision-making. The
former president of the Central bank, Dr. Noël
Ramirez, who is now president of the Economic
Commission (EC) of the National Assembly, has
encouraged a constructive dialog not only with the
Fund office, but also with the opposition parties
and civil society. The EC itself includes deputies
with strong links to the syndicates, civil society
and the church. During a meeting at the end of
May, at the request of the government, the IMF
Resident Representative, Joachim Harnack,
presented to the EC the status of the negotiations
with the Fund, highlighting the need for tax
reform, alignment of expenditures with available
resources, and the systematic recovery of assets
of four banks that had failed during 2000-01.
Mr. Harnack also gave the first in a series of
lectures to the National Council for Economic and
Social Planning (CONPES), informing the gathering
of broad aspects of the PRGF negotiations.
Composed of some 50 high-level representatives
from civil society, syndicates, and political
parties, the council is actively engaged in the
country's poverty alleviation strategy. The series
is financed by the World Bank and draws speakers
from various economic areas, including government
institutions.
Serbia—Improved dialogue with the trade
unions; corruption issues
The Office of the Resident Representative is
committed to improving dialogue with trade unions
through more systematic and regular meetings with
trade unions (so far, several have been held) and
by participating in trade union conferences and
meetings
To this end, IMF Resident Representative Joshua
Charap participated in the labor union conference
"Trade Union Strategies in the Process of
Transition", held in Belgrade on 24 January 2002,
where he made a presentation on the impact of IMF
programs on social dialogue.
The Resident Representative Office also
discussed issues relating to corruption with
Transparency International. A "box" (brief report)
on progress in fighting corruption in Serbia was
included in an
IMF staff report submitted to the IMF's
Executive Board in late April 2002.
Tajikistan: Economic policy issues and
the PRSP
During an April visit to Dushanbe, Mr. John
Odling-Smee, Director of the European II
Department met with representatives of local and
international NGOs, including Save the Children,
Aga Khan Foundation, Médecins sans Frontières, the
National Association of Business Women and CARE
International. On the consultation process used
for the preparation of the Poverty Reduction
Strategy Paper (PRSP), the consensus view among
NGOs was that participation in the preparation
process was extremely valuable. For many of them
it was the first opportunity to interact with
government officials on policy issues. They also
noted that the final version of the PRSP would be
carefully examined to see if their views were
fully reflected.
NGOs urged the Fund to support policies that
could strengthen governance, reduce corruption,
and provide resources directly to the NGOs. Mr.
Odling-Smee explained that Fund-supported programs
would address governance and corruption, but were
unable to provide direct support to their
organizations.
Mr. Odling-Smee noted that future missions
would meet with NGO representatives on a regular
basis.
Turkey—Dialogue on the economic program
The missions and the resident Representative
office have active contacts with a range of CSOs,
including in some cases regular meetings and
participation in seminars sponsored by these
organizations. The key CSO contacts include the
main public sector labor union (TURK-IS), the two
business organizations (TUSIAD, representing
large- scale industrialists, and TOBB,
representing SMEs), the bankers' association, the
foreign investors' association (YASED), and the
exporters' association (TIM).
A range of issues are important both to these
organizations and to the Fund. These issues
include the economic program generally (including
the political support from CSOs), labor market
issues (wages and job security), banking reform,
taxation, and the business environment (removing
red tape, fighting corruption, improving the FDI
framework).
Ukraine - How to achieve the Millennium
Development Goals
In Ukraine, the interaction between the
Resident Representative office and civil society
organizations has concentrated mainly on the
issues of poverty alleviation, agricultural
policy, human development, the impact of the
Chernobyl nuclear accident, the ecological
dimensions of sustainable development and their
interaction with economic policy, as well as on
problems of transparency and fairness related to
the recent parliamentary elections.
Specifically, discussion has focused on how the
policies of the government, under the
Fund-supported program, could better contribute
toward achieving the Millennium Goals. Inter alia,
the priorities thus identified have led to the
recommendations that: (i) the tax system be
streamlined, eliminating a myriad of economically
unjustifiable exemptions and privileges for some
economic sectors, thereby broadening the tax base,
permitting a reduction in tax rates, and leading
to a more equitable tax burden; and (ii) priority
expenditures in health and education be protected,
despite the significant spending cuts that are
necessary in order to preserve macroeconomic
stability.
At headquarters in Washington
Some 12 NGO representatives from eight
different countries visited the Fund on June 12 as
part of an international program sponsored by the
School for International Training (Vermont, USA).
NGO representative visit Washington and New York
for meetings with NGOs, Congress, and
international organizations. At the IMF, they met
with several staff members to discuss the Fund
role in poverty reduction, the role of the
Independent Evaluation Office, and the Fund
outreach to civil society. They also met with
economists who work on their countries of origin.
A preparatory meeting held on June 19 discussed
the details of a high-level meeting between the
IMF, the World Bank and the labor unions (ICFTU,
WCL, AFL-CIO) that will take place in Washington
in October.
Since the Spring Meetings in April, IMF staff
met with NGOs to discuss various topics, including
the IMF proposal for a sovereign debt
restructuring mechanism; the
Independent Evaluation Office's reports; the
PRSP and the status of implementation of the HIPC
Initiative; country-specific issues on Uganda,
Malawi, and The Gambia.
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IMF Staff News
- On July 1, George Abed will succeed Paul
Chabrier as
Director of the Middle Eastern Department.
Mr. Abed, a Jordanian national, has more than 20
years of experience in the IMF, including senior
positions in the Middle Eastern Department, and
most recently as Deputy Director in the Fiscal
Affairs Department
- Anoop Singh will succeed Claudio Loser as
Director of the Western Hemisphere Department.
Mr. Singh, who is currently Director for Special
Operations, will assume the position of
Director-designate until Mr. Loser's retirement,
later this year. Mr. Singh, an Indian national,
has more than 25 years experience at the IMF.
Prior to his appointment as Director for Special
Operations in February 2002, he was Deputy
Director of the Asia and Pacific Department.
Speeches
-
Building a Better Future in Africa, address
by Horst Köhler, Accra, Ghana, May 3, 2002.
-
Promoting Sustained Growth and International
Financial Stability, address by Horst
Köhler, National Press Club, April 17, 2002
-
Achieving Financial Stability: An International
Perspective, address by Shigemitsu Sugisaki,
Deputy Managing Director, IMF, Beijing, China,
May 26, 2002
Selection of Recent Papers
-
Why is it so Hard to Finance Budget Deficits?
Problems of a Developing Country, by
Feltenstein, Andrew, Iwata, Shigeru, Working
Paper No. 02/95
-
Privatization in Ukraine: Challenges of
Assessment and Coverage in Fund Conditionality,
by Katrin C. Elborgh-Woytek, Mark W. Lewis,
Policy Discussion Paper No. 02/7
-
When Is Economic Growth Pro-Poor? Experiences in
Malaysia and Pakistan, by Mahmood H. Khan,
Working Paper No. 02/85
-
More on the Effectiveness of Public Spending on
Health Care and Education: A Covariance
Structure Model, by Emanuele Baldacci; Maria
T Guin-Siu, Luiz de Mello, Working Paper No.
02/90
-
The Choice Between External and Domestic Debt in
Financing Budget Deficits: The Case of Central
and West African Countries, by Philippe
Beaugrand; Boileau Loko, Montfort P Mlachila,
Working Paper No. 02/79
-
Composition of Government Expenditures and
Demand for Education in Developing Countries,
by Era Dabla-Norris, John M. Matovu, Working
Paper No. 02/78
-
Expenditure Composition, Fiscal Adjustment, and
Growth in Low-Income Countries, by Sanjeev
Gupta; Benedict J. Clements, Emanuele Baldacci,
Carlos Mulas-Granados, Working Paper No. 02/77
-
Is Policy Ownership An Operational Concept?
by James M. Boughton, Alexandros T. Mourmouras,
Working Paper No. 02/72
-
The Enhanced HIPC Initiative and the Achievement
of Long-Term External Debt Sustainability,
by the Staffs of the World Bank and the
International Monetary Fund
-
Lessons from the Real-Time Assessments of
Structural Conditionality, by the Policy
Development and Review Department.
-
Heavily Indebted Poor Countries (HIPC)
Initiative: Status of Implementation, by the
Staffs of the World Bank and the International
Monetary Fund
-
External Debt Management in Heavily Indebted
Poor Countries (HIPCs), by the Staffs of the
IMF and the World Bank
-
Review of the Poverty Reduction Strategy Paper (PRSP)
Approach: Early Experience with Interim PRSPs
and Full PRSPs, by the Staffs of the IMF and
World Bank
-
Review of the Key Features of the Poverty
Reduction and Growth Facility—Staff Analyses,
by the Fiscal Affairs and Policy Development and
Review Departments
-
Challenges in Expanding Development Assistance,
by Peter S. Heller, Sanjeev Gupta, Policy
Discussion Paper No. 02/5
Issues Briefs
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