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Civil
Society Newsletter
February 2005
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In this issue:
Recent
Developments in
IMF-CSO Relations
On December 26,
an earthquake and
tsunami of
unimaginable
magnitude
devastated coastal
areas of South
Asia, costing the
lives of some
250,000 people. In
an extraordinary
show of
generosity,
governments and
international
organizations have
already pledged
some $4 billion in
the form of grants
and soft loans,
and several donors
have indicated
that their
contributions
could rise. IMF
Managing Director
Rodrigo de Rato
issued a statement
on the day of the
tragedy. He
followed that with
a statement at the
ASEAN Leaders'
Special Meeting in
Jakarta on January
6, just before
traveling to
Indonesia's
hard-hit Aceh
province. He
expressed his
sympathy and
condolences and
said that the IMF
is prepared to
offer all
assistance at its
disposal. This
includes sizable
funds under an
emergency
assistance
facility, and
advice and
technical
assistance in
assessing the
macroeconomic
impact and
budgetary and
balance of
payments needs
stemming from the
disaster. The
feature article
explains these
efforts in detail.
With the
international
community
preparing for the
UN Millennium
Summit in
September, 2005
will be an
important test of
the international
community's
commitment to
poverty reduction.
The overall
picture is not
encouraging. With
just 10 years to
go, the evidence
suggests that, on
current trends,
most of the
Millennium
Development Goals
(MDGs) will be
missed globally,
and by a long way
in Africa. Civil
Society
Organizations
(CSOs) have
started targeting
G-7 countries with
their campaigns
urging 100% debt
relief and
increased
development
assistance for
poor countries.
The G7 discussions
of these important
matters likely
will come to a
head in the next
six months. The
IMF is preparing
several papers and
reviews that will
contribute to the
joint
international
effort to reduce
poverty. An
article gives
an overview of
this upcoming work
on low-income
countries.
Of great
interest to CSOs,
especially to
those working on
the local level-as
well as to global
CSOs working on
transparency
issues-is the
recent
Draft Guide on
Resource Revenue
Transparency
that addresses the
challenges
associated with
the management of
revenues from
extractive
industries such as
oil, natural gas,
and mining. The
guide, summarized
in an
article, has
been posted on the
IMF's website in a
number of
languages and
comments are
welcome until
February 18.
Recent dialogue
between the IMF
and CSOs involved
the diverse social
movements and CSOs
at the fourth
Bridge Initiative
Annual Meeting
in Paris. The
Initiative aims to
facilitate
dialogue between
key players in the
globalization
debate. In
January, IMF
staff, for the
first time,
attended the World
Social Forum in
Porto Alegre,
Brazil. Simonetta
Nardin, IMF Senior
External Relations
Officer, describes
her experience in
a
letter from the
field.
Back to Table of
Contents
Feature
Article:
Responding to the
tsunami
The December
26, 2004, South
Asian tsunami
disaster brought
forth an
unprecedented
global outpouring
of humanitarian
assistance. At
least 250,000
lives were lost,
and millions of
others were
severely affected
by the
destruction.
Governments and
international
organizations
already have
pledged some $4
billion in the
form of grants and
soft loans, and
several donors
have indicated
that their
contributions
could rise. United
Nations Secretary
General Kofi Annan
announced that
$970 million would
be available to
meet the immediate
needs of the
relief effort.
In addition, a
number of
participants have
supported debt
relief to the
affected
countries, in the
first instance
through a
moratorium on
payments due this
year. The G-7
countries agreed
to pursue this
option through the
Paris Club.
IMF Managing
Director Rodrigo
de Rato attended
the international
donors conference
in Jakarta,
Indonesia, on
January 6 and
also, along with
World Bank
President James
Wolfensohn,
visited devastated
areas of Aceh
province in
Sumatra. After the
meeting, he said:
"The affected
countries have
widely varying
needs and
capacities, so it
is essential to
have a clear
understanding of
the financing
strategies that
can be pursued in
light of the
different offers
on the table. It
is extremely
important that the
governments take
advantage of the
offers of grant
aid. While
concessional loans
and debt relief
may be attractive
in the short term,
grant aid will not
have to be repaid,
and such offers
may not be
available after
the immediate
crisis fades."
The
International
Monetary Fund is
prepared to offer
all assistance at
its disposal,
including sizable
funds under an
emergency
assistance
facility. This
financing, which
could be on the
order of $1
billion for the
most affected
countries, could
be made available
without an IMF
program. Sri Lanka
already has
received a
deferral of its
repayments for the
remainder of 2005,
totaling about
$113 million.
Taken together
with a request for
new funding, the
Fund could provide
Sri Lanka with the
equivalent of $250
million of
assistance.
The IMF also
can provide advice
and technical
assistance in
assessing the
macroeconomic
impact and
budgetary and
balance of
payments needs
stemming from the
disaster. The
Maldives has
already requested
such assistance.
Later in
January, IMF First
Deputy Managing
Director Anne
Krueger visited
Sri Lanka and the
Maldives. At the
conclusion of her
visit to the
Maldives, she said
in a statement:
"The government
made clear to me
its concern to
carry out the
recovery effort
without
undermining the
laudable progress
it has made in
macroeconomic
policy in recent
years. It will be
important to move
as quickly as
possible to help
the homeless and
undertake
reconstruction. At
the same time it
will be important
to avoid
generating
bottlenecks that
could in fact slow
down delivery of
rehabilitation and
risk macroeconomic
instability."
In the weeks
following the
tsunami IMF staff,
their spouses, and
Fund retirees
donated almost
$154,000 for the
victims. IMF
management matched
those
contributions
dollar-for-dollar,
for a total of
almost $308,000.
The money will be
go to the
International
Federation of Red
Cross and Red
Crescent. Those
organizations'
$400 million
relief effort will
provide emergency
and supplemental
food aid, water
and sanitation,
vaccinations and
other health aid,
tents, blankets,
hygiene kits, and
kitchen sets,
psychosocial
assistance, and
direct support
costs to the
affected nations.
Back to Table of
Contents
Millennium
Development Goals
The IMF's
work in low-income
countries
The IMF this
year will continue
to review its
policies and its
role in low-income
countries-from
poverty reduction
strategies to the
design of its
facility for poor
countries. This
work could not be
more timely and
appropriate.
Throughout 2005,
the international
community will
consider progress
toward the
implementation of
the Millennium
Development Goals
(MDGs) by 2015, an
effort that will
culminate with the
UN Millennium
Summit in
September. The
IMF's work will
help review and
define the role
the Fund is
playing in helping
poor countries
increase growth
and reduce
poverty-essential
aspects in their
path to achieving
the MDGs.
The following
is an overview of
upcoming papers
and reviews, as
well as an update
on the Fund's
recently
established unit
carrying out work
related to poverty
and social impact
analysis (PSIA) at
the Fund.
Fund
Signaling and
Donor Coordination
in Low-Income
Countries
The paper
addresses the
Fund's role in
supporting donor
financial
assistance to
low-income
countries, and how
it can better
coordinate its own
support with that
of other partners.
The paper will
draw on the
results of a
survey of
donors/creditors/Multilateral
Development Banks
and Poverty
Reduction and
Growth Facility
(PRGF)-eligible
members to better
understand their
demands and needs.
It will consider
two sets of
interrelated
issues: first, the
current situation
regarding the
impact of Fund
signals on donors
and recipients,
and whether their
needs are being
met; and second,
practical aspects
of Fund/donor
coordination. The
paper will aim to
identify
mechanisms to
strengthen the
Fund's instruments
and processes in
both areas. The
paper will be
prepared for Board
discussion in
advance of the
Spring Meetings.
Poverty
Reduction
Strategies Review
This year marks
the fifth
anniversary of the
Poverty Reduction
Strategies (PRS)
initiative, and
World Bank and
Fund staff plan to
use the 2005
progress report
(prepared every
year for the
Annual Meetings of
the institutions)
to review
progress,
challenges, and
good practice
related to several
key issues. In
particular, the
review will
address how to
increase the
effectiveness of
the Poverty
Reduction Strategy
Papers (PRSPs) as
a vehicle for
attaining the
MDGs. The 2005
review will
include the views
of staff members
and other
stakeholders,
including country
officials, donors,
civil society
organizations, and
other partners. It
will focus on five
themes identified
through discussion
with stakeholders
and review of
literature that is
central to the
effectiveness of
the PRS approach.
The themes are:
1.
Strengthening the
medium-term
orientation of the
PRS approach;
2. Utilizing
the PRS as a
mutual
accountability
framework between
countries and
donors;
3. Broadening
and deepening
meaningful
participation;
4. Enhancing
linkages between
the PRS, Medium
Term Expenditure
Framework, and
budgets; and
5. Tailoring
the approach to
conflict-affected
and fragile
states.
A concept note
will be posted
shortly on the
World Bank and IMF
websites. A number
of consultations
are planned,
including an
online discussion
forum. More
information will
be distributed
shortly. The
review will be
included in the
progress report,
which will be
discussed by the
Boards of the Fund
and the Bank
shortly before the
Annual Meetings.
Review of
PRGF Program
Design
This review
will focus on
three areas that
are key to the
Fund's efforts to
enhance growth and
poverty
alleviation among
its low-income
members: (i)
lessons for
low-income
countries and the
Fund from the
post-war
experience of
determinants of
growth; (ii)
monetary and
fiscal policy
design in
countries that
have succeeded in
their
stabilization
efforts; and (iii)
the macroeconomics
of high aid
inflows. It is
expected that
these papers will
be considered by
the Board shortly
after the 2005
Spring Meetings.
Debt
Sustainability
The Executive
Boards of the IMF
and the World Bank
have endorsed the
key elements of a
proposed debt
sustainability
framework for
low-income
countries. The
objective of the
framework is to
support low-income
countries in their
efforts to achieve
the MDGs without
creating future
debt problems, and
to keep countries
that have received
debt relief under
the Heavily
Indebted Poor
Country (HIPC)
Initiative on a
sustainable track.
In guiding future
financing
decisions, the
framework rests on
three pillars: (i)
an assessment of
debt
sustainability
guided by
indicative
country-specific
debt-burden
thresholds related
to the quality of
policies and
institutions; (ii)
a standardized
forward-looking
analysis of the
debt and
debt-service
dynamics under a
baseline scenario
and in the face of
plausible shocks;
and (iii) an
appropriate
borrowing (and
lending) strategy
that contains the
risk of debt
distress.
Building on
initial Board
discussions of the
proposed framework
in February/March
2004, and further
considerations in
September 2004,
the staffs of the
two institutions
are preparing a
follow-up paper
that attempts to
resolve
outstanding issues
on the indicative
debt-burden
thresholds; the
interaction of the
framework with the
HIPC Initiative;
and the modalities
for Bank-Fund
collaboration in
developing a
common assessment
of sustainability.
Conditionality
Guidelines
The Fund will
shortly conduct
the first review
of its new
conditionality
guidelines,
adopted in 2002.
While these
guidelines apply
to all IMF
lending, they are
highly relevant to
the Fund's work in
low-income
countries. The
guidelines
emphasized the
importance of,
among other
things, national
ownership of
policy programs
and of parsimony
and clarity in the
formulation of
conditions.
Although the
ultimate objective
of the new
guidelines was to
contribute to
improved economic
outcomes, it is
still too early to
evaluate whether
they have made a
difference in this
respect. The
review will,
however, examine
whether the Fund's
structural
conditionality has
been streamlined,
both in terms of
breadth of
coverage and
numbers of
conditions, and if
appropriate
efforts have been
made to promote
ownership. The
review will also
provide some
preliminary
evidence as to
whether these
efforts are
leading to more
consistent
implementation of
Fund-supported
programs, which
was expected to be
an intermediate
step toward better
ultimate outcomes.
Poverty and
Social Impact
Analysis
In July, the
Fund formally set
up a Poverty and
Social Impact
Analysis (PSIA)
group of five
experts within an
existing division
in the Fiscal
Affairs
Department. Area
departments have
now identified ten
countries
(Bolivia,
Djibouti,
Ethiopia, Kenya,
Mali, Moldova,
Senegal, Sri
Lanka, Tajikistan,
and Uganda) where
PSIA support would
be most valuable.
Work plans have
been developed by
the group and
relevant country
teams. The PSIA
group has
participated in
four missions,
addressing issues
ranging from the
liberalization of
energy prices to
the response to
macroeconomic
shocks. Several
more missions are
planned for early
2005. If resources
permit, the group
will also
undertake PSIAs in
the IMF's core
areas where no
such studies are
available.
However, the small
size of the PSIA
group limits what
can be done in the
short run. Robert
Gillingham, who
leads the team,
will be meeting
with CSOs in
London on February
18 to brief them
on the group's
work program.
Review of
Fund Work on Trade
A report that
will be discussed
by the Board at
the end of
February assesses
the Fund's
priorities in the
trade area, takes
stock of its work,
and reviews the
Fund's
collaboration and
division of labor
with other
institutions. The
report notes that
the Fund has been
a consistent
advocate of open
trade regimes. In
recent years, it
has encouraged
developed
countries to
examine the impact
of their trade
policies on poorer
countries, has
pressed for an
ambitious Doha
Round, and has
worked with
members to address
potential balance
of payments or
fiscal impacts of
liberalization.
There has been a
decline in the
number of
trade-related
program conditions
under
Fund-supported
programs, but an
increase in
aspects of
trade-related
surveillance,
management
communication, and
research. Among
other
recommendations,
the report
suggests that the
Fund should
strengthen its
focus on trade in
services and on
the spillover
effects of trade
policies in large
developing
countries. It also
notes that there
remains
considerable scope
for the Fund to
draw more on the
expertise
especially of the
World Bank in the
trade area.
Finally, the
report also
requests the
Board's guidance
on whether to
conduct follow-up
work based on case
studies that would
look more deeply
at the design and
impact of trade
reforms
recommended by the
Fund.
Back to Table of
Contents
HIV/AIDS
IMF
continues dialogue
on HIV/AIDS and
macroeconomic
policy
To address
allegations that
the IMF is an
obstacle to
funding for the
prevention and
treatment of
HIV/AIDS in
countries with
Fund-supported
programs, the
IMF's Fiscal
Affairs Department
hosted a half-day
workshop on
January 19
bringing together
many key actors
involved in the
issue. The meeting
was the second
held at the IMF in
the past six
months to discuss
how the Fund,
donors, and
governments can
address the
challenges of
delivering and
absorbing
HIV/AIDS-related
foreign aid.
The workshop
brought together
official donors,
international
agencies, policy
institutes, and
nongovernmental
organizations
(NGOs), and sought
to go beyond the
general
discussions of the
June meeting (see
IMF Survey
July 12, 2004).
Instead, it
focused on
specific issues
related to the
scaling-up of
donor aid in four
countries:
Honduras, Kenya,
Uganda and Zambia.
The countries were
chosen on the
basis of feedback
from the Global
Fund to Fight
AIDS, Tuberculosis
and Malaria. Fund
mission chiefs for
the four countries
engaged in an
informed dialogue
with the Global
Fund's
representative and
the other
participants. The
meeting was opened
by Deputy Managing
Director Agustín
Carstens and
moderated by Peter
Heller, Deputy
Director of the
IMF's Fiscal
Affairs
Department.
Although donors
are increasingly
committing
financial
resources to the
fight against
HIV/AIDS, scaling
up health spending
will require that
several specific
problems be
addressed before
conditions on the
ground can improve
markedly. Most
participants
expressed concern
that the
medium-term
spending plans of
countries are too
rigid and prevent
a more rapid
increase of health
spending. However,
Fund mission
chiefs described
in great detail
how Fund-supported
programs contain
no health-related
spending ceilings.
Rather, they are
designed with only
broad fiscal
deficit ceilings
aimed at ensuring
macroeconomic
stability. The
mission chiefs
defended the work
of the Fund in the
four countries
against the
accusation that
the IMF impedes
increased
spending. (For a
discussion of the
Fund policies
related to
spending on
HIV/AIDS, see this
recent
document.)
Nonetheless,
all participants
acknowledged the
magnitude of the
problems faced by
the effort to
fight the epidemic
and mitigate its
impact. Countries
have difficulties
absorbing large
aid inflows
because of severe
shortages of
health care
professionals,
poor compensation
for health
workers,
inadequate medical
facilities, and an
unreliable supply
of medicines.
Another challenge
mentioned was how
to weigh the
urgency of
spending on
HIV/AIDS with
other crucial
health and
poverty-related
priorities.
Participants also
said that greater
predictability and
sustainability of
aid flows is
essential.
The IMF's
policy dialogue
with governments
typically involves
finance ministries
and central banks,
while many
workshop
participants
pursue their
policy dialogue
with health
ministries.
Participants
suggested that the
dialogue on budget
priorities in the
health sector
should be widened
to other
stakeholders. They
said this would
improve
transparency about
the spending
priorities of
finance ministries
under an IMF
program.
Although many
participants said
they were
reassured that the
IMF does not
become directly
involved in a
country's health
spending
decisions, the
consensus was that
it needs to do
more to clarify
its role. Although
IMF country
reports do not
discuss health
sector issues
explicitly, the
meeting clearly
revealed, and
participants were
impressed by, the
extent to which
most mission
chiefs take into
account the
HIV/AIDS issue and
their efforts to
ensure appropriate
fiscal space for
increased health
spending.
Participants
suggested that the
IMF should work
with development
partners to
clarify how fiscal
ceilings are
developed, and to
reassure the
authorities that
program ceilings
will be flexible
in accommodating
additional
spending when
financing is
available,
particularly on
grant terms.
Many of the
participants had
also attended the
June meeting, and
they encouraged
the Fund to
continue this
dialogue. They
argued that future
meetings could be
extended to a
broader outside
audience, in order
to provide a
better
understanding of
the extent of the
IMF's work on
these issues, and
the complexity of
the issues as they
are being
addressed at the
country level.
Back to Table of
Contents
New IMF
publication: The
Macroeconomics of
HIV/AIDS
To mark World
AIDS Day, December
1, 2004, the IMF
published
The Macroeconomics
of HIV/AIDS,
a book edited by
Markus Haacker, an
economist in the
IMF's African
Department. The
volume brings
together
contributions by
experts from many
different
international
organizations and
other institutions
involved in
formulating and
implementing
policy responses
to the epidemic or
dealing with its
social and
economic
consequences.
The book was
published with two
goals. First, it
is intended to
fill the gap
between studies
focusing on
specific
sectors-especially
public health and
education-and
assessments of the
broader social and
economic
consequences of
the disease. In
contrast with most
other
macroeconomic
studies on the
subject, the book
emphasizes how
HIV/AIDS affects
society and the
economy overall
through its
microeconomic
impact, and
describes the
implications for
the welfare of
individuals and
households.
Second, by
spelling out the
fiscal dimension
of HIV/AIDS, and
linking the
response to
HIV/AIDS to a
macroeconomic
framework, the
book aims to
provide a resource
for public
policymakers
seeking to develop
an effective
response to the
epidemic and to
formulate economic
policy in
countries severely
affected by the
HIV/AIDS.
Back to Table of
Contents
Africa
New IMF
publication:
Postconflict
Economics in
Sub-Saharan
Africa-Lessons
from the
Democratic
Republic of the
Congo
The Democratic
Republic of the
Congo (DRC), the
third-largest
country in Africa,
is making
significant
progress at both
the political and
economic fronts to
extricate itself
from one of the
bloodiest wars in
African history
and decades of
economic
mismanagement. The
DRC has made
progress toward
breaking the
vicious circle of
hyperinflation, a
declining
currency, and
collapsing output.
This turnaround
offers lessons for
other countries
coping with
internal conflict
and for the
international
community in its
efforts to provide
adequate and
timely support to
postconflict
countries.
The IMF has
just published
Postconflict
Economics in
Sub-Saharan
Africa-Lessons
from the
Democratic
Republic of the
Congo, a
book edited by
Jean A.P. Clément,
Assistant Director
in the African
Department. The
book looks at the
lessons and
challenges from
conflict to
reconstruction,
providing an
analysis of
African conflicts,
and especially
their key economic
characteristics.
These issues have
been at the center
of the IMF staff's
work on the DRC in
recent years. The
book also includes
an article from
World Bank staff
on the
demilitarization
and reintegration
of ex-combatants
in the DRC.
Back to Table of
Contents
Civil
Society-IMF
Dialogue:
The IMF
at the Fourth
Bridge Initiative
International
Annual Meeting
A December 5-7
meeting of the
Bridge Initiative
in Paris brought
together a diverse
group of actors,
including
high-level
representatives
from multilateral
institutions and
global civil
society, notably
the World Social
Forum (WSF). This
year the IMF was
represented by
Klaus Enders,
Assistant Director
of the IMF Offices
in Europe, and
Simonetta Nardin,
IMF Senior
External Relations
Officer, who said
that the number of
participants,
larger and more
diverse than in
previous years,
offered a special
opportunity to
engage, listen,
and discuss issues
of mutual
interest.
It was the
fourth of the
Bridge
Initiative's
Annual Meetings,
an effort
initiated in 2000
by independent
media producers in
Europe and North
America to
encourage dialogue
among stakeholders
with conflicting
perspectives on
globalization
issues. The group
has hosted a
series of seminars
and televised
debates between
well-known CSOs,
business, and IFI
representatives.
IMF staff have
participated in
several Bridge
Initiative events
in Europe and the
U.S. (see
Civil Society
Newsletter
February 2004).
While the Paris
agenda envisaged
five different
working groups,
participants
decided on the
first day to
concentrate on two
issues: the
January 2005 WSF
in Porto Alegre
and the 2005
activities related
to the Millennium
Development Goals
(MDGs). A UNESCO
representative
addressed what he
called the
misgivings within
the social
movements about
contact with the
Bretton Woods
Institutions
(BWIs). He told
participants that
if they want to
change the world
they have to be
both "outside"
(i.e. protesting
in the streets) as
well as "inside"
(cooperating
wherever possible)
these
institutions.
Whoever wants to
influence global
governance has to
gain influence
over these
institutions, the
speaker said, and
this has to be
achieved largely
by working with
national
governments to
influence the
positions they
take in the
boardroom
discussions of the
BWIs. At the WSF
in Mumbai, India,
in 2003, the
"Tables of
Controversy"
offered a space
for UN agencies to
participate in
debates that were
usually reserved
for CSOs. There
were four tables
in 2003, and the
organizing
committee was
considering 30
different
proposals this
year.
The working
groups also
discussed the
MDG-related events
in 2005 that will
lead up to the UN
Millennium Summit
in September in
New York. In one
group the
discussion quickly
turned to the MDGs
themselves.
Members of the WSF
worried that the
MDGs were dividing
the movement:
While many NGOs
(especially in the
North) are
embracing the MDGs
and will spend the
year campaigning
to achieve them,
many in the South
consider them an
"imposition" of a
charity/aid-focused
approach that they
reject, preferring
a human
rights-based
approach to
development.
The meeting
ended with the
organizers' pledge
to organize Tables
of Controversy at
the 2005 WSF, and
they stated their
intention to
ensure that the
World Bank and the
Fund would be
invited to
participate (see
letter from the
field).
Back to Table of
Contents
Transparency
IMF
invites public
comment on Draft
Guide on Resource
Revenue
Transparency
As part of the
effort to promote
transparency among
member countries,
the IMF has
invited the public
to comment on a
Draft Guide on
Resource Revenue
Transparency.
The guide
addresses the
challenges
associated with
the management of
revenues from
extractive
industries such as
oil, natural gas,
and mining. It is
available on the
IMF website in
Arabic,
Chinese,
English,
French,
Portuguese,
Russian, and
Spanish.
Comments are
welcome until
February 18, 2005,
(rrt@imf.org)
and will be
reviewed and
considered in the
preparation of the
final version of
the Draft Guide.
Stronger
government
institutions and
improved
transparency can
provide
significant
benefits to a
country. Fiscal
transparency can
promote more
informed public
debate. It also
helps achieve
sounder budget
policies. The
guide applies the
Fiscal
Transparency Code
and supplements
the
Manual on Fiscal
Transparency,
which was
published in 2001
as part of the
IMF's work on
Standards and
Codes. Fiscal
transparency
reports, or fiscal
Reports on the
Observance of
Standards and
Codes, have been
published for
about 70 member
countries on the
IMF's website.
These reports
assess country
practices against
the standards
defined in the
Fiscal
Transparency Code.
The draft guide
can be used for
fiscal
transparency
assessments by the
IMF in natural
resource-rich
countries and will
also be useful in
the IMF's policy
dialogue in these
countries.
Fiscal
transparency has
become an
important issue
for CSOs in the
past few years.
The IMF has
engaged in an
extensive dialogue
with groups that
are involved in
Publish What You
Pay and other
campaigns related
to extractive
industry revenue
transparency (see
Civil Society
Newsletter May
2004). The IMF
also supports the
Extractive
Industries
Transparency
Initiative (EITI),
which was launched
by UK Prime
Minister Tony
Blair at the
Johannesburg World
Summit of
Sustainable
Development in
September 2002.
Summary of
the Draft Guide
The Draft
Guide promotes
fiscal
transparency in
four areas:
1) Clarity
in the roles and
responsibilities
of government.
For example,
governments should
establish a clear
legal and
regulatory
framework for the
natural resources
sector, covering
all production
stages and
including
licensing
procedures,
production sharing
contracts, and the
fiscal regime
(e.g., royalties
and other taxes).
The relations
between
governments and
state-owned
enterprises, the
mechanisms to
coordinate oil
savings funds with
the government
budget, and
resource revenue
sharing
arrangements
between central
and local
governments should
also be clear.
2)
Disclosure of
resource revenue
data and other
relevant
information.
In this area, many
resource-rich
countries can make
quick and highly
visible progress.
All government
resource revenues
should be
published in the
budget and other
reports.
Governments should
also disclose data
on debt and other
liabilities (e.g.,
government
guarantees)
related to
resource sector
operations;
financial assets
(e.g., those held
in oil savings
funds); and
information on
noncommercial
(quasi-fiscal)
activities of
state-owned
enterprises, such
as the sale of
energy products
below cost.
3) Open
processes for
budget preparation
and execution.
Governments need
to make clear
policy statements
on the use of
revenues from
natural resources.
Non-resource
fiscal balances
(i.e., the fiscal
balance excluding
resource revenues)
should be used to
monitor fiscal
policy
performance, in
addition to the
overall fiscal
balance and other
indicators. Price
and other relevant
risks, as well as
measures to
address them
(e.g., hedging
policies), should
be explained in
budget documents.
Systems and
policies on
accounting and
internal control
and audit should
be transparent and
applied as
elsewhere in the
public sector.
Domestic and
international
resource companies
should be subject
to the same tax
administration
framework as other
companies, and
this framework
should be clear
and cover all
aspects related to
taxpayers' rights
and obligations,
revenue
administration
powers, and
dispute resolution
processes; and
4) External
or independent
assurances of
integrity.
This includes the
necessity of
companies
complying fully
with
internationally
accepted standards
for accounting,
auditing, and
publication of
accounts. A
national audit
office or any
other independent
national
organization
should verify and
report regularly
to Parliament on
revenue flows
between companies
and the
government.
Back to Table of
Contents
Letters from
the Field:
Simonetta
Nardin, IMF Senior
External Relations
Officer, Porto
Alegre, Brazil
The IMF at
the World Social
Forum
"Ça c'est un
travail
perilleux!" The
French official's
admonition was the
most memorable of
a series of
comments about the
dangers of walking
around Porto
Alegre prominently
displaying an IMF
badge. Others were
more direct,
asking me, only
half-jokingly, if
I had been
attacked -
verbally, at a
minimum!
Welcome to the
World Social Forum
(WSF), in Porto
Alegre, Brazil
where displaying
your affiliation
to that Fund
is considered
an occupational
hazard. But
despite the many
warnings about my
institutional
affiliation, what
I saw while
walking the
five-kilometer
length of the
Forum, set along
the banks of the
Guaiba River, was
more surprise then
anger, disbelief
rather then rage.
Young activists
with
Che-emblazoned
t-shirts point to
my badge and
whisper. Others
are so confused
that they ask:
"The IMF? That
IMF?! The
International
Monetary Fund?"
One participant
takes a picture of
me and my badge,
"to prove that we
are in dialogue,"
and thanks me for
attending. A
member of the
European
Parliament salutes
the change: "Two
or three years ago
you could not have
walked around
here, and now
everybody is happy
that you are in
Porto Alegre!"
For the first
time this year,
the Fund attended
the World Social
Forum. In its
fifth year-held in
the last week of
January as a
counter-event to
the World Economic
Forum in Davos-the
WSF this year drew
150,000
representatives
who, over five
days, attended
more than 2,000
events. They
pondered
everything from
the role of
religion in modern
conflicts to
"neoliberal
capitalism." Many
of these events
featured the Fund:
from how we block
progress in the
fight against
HIV/AIDS to the
calls to retire-at
60.
I was invited,
together with the
World Bank and the
United Nations, to
participate in a
so-called Table of
Controversy
organized by the
Bridge Initiative
(see
story above),
to discuss the
issues related to
the Global Call to
Action Against
Poverty (GCAP), a
campaign launched
by many civil
society
organizations
around the world.
The discussion
highlighted the
view that the IMF
is still seen by
many as part of
the problem. The
issues raised by
civil society
panelists, Thomas
Deve of Zimbabwe's
Mwengo (Reflection
and Development
Centre for NGOs in
East and Southern
Africa) and
Cecilia Lopez
Montano of Agenda
Colombia, focused
on the
shortcomings of
the international
community, and in
particular the IMF
and the World
Bank, in reducing
poverty. Many
questions from the
audience came from
African
participants who
affirmed that
Africa is poor
because of
policies imposed
by the Bretton
Woods
Institutions.
Candido Grzybowski
of Brazil's Ibase
offered
reflections about
the governance of
the UN, the IMF
and the Bank,
calling for a
democratization of
the institutions.
While it was
difficult to
address all these
issues in a
debate, my World
Bank colleague and
I tried hard to
focus on some
commonalities.
Sensing a shift
among rich
countries about
the urgency to
address poverty,
the GCAP has three
very pragmatic
themes on which it
will campaign:
more aid; better
trade terms; and
debt cancellation
for poor
countries. The
Fund is working
extensively on
many of these
issues. For
instance, the Fund
stands ready to
help countries
make better use of
increased aid
flows, if and when
they materialize.
Most
importantly, the
Fund's will to
engage, and the
openness of CSOs
to having the Fund
speak at one of
the Forum's
events, highlights
the fact that IFIs
and CSOs are all
stakeholders in
the development
discourse. The
need for occasions
like the
discussion in
Porto Alegre will
hopefully give us
a chance to build
on our common
goals while
respecting our
differences.
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
the IMF and CSOs
- In
cooperation with
the World Bank
and the United
Nations
Development
Program, the IMF
organized a
day-long
workshop on data
about
microfinance on
October 26. The
workshop, with
the title "Data
on Access of
Poor and
Low-Income
People to
Financial
Services,"
was the outcome
of CSO and UN
requests for the
Fund and Bank to
help assess the
nature and scope
of microfinance
around the
world. From the
IMF side, the
Statistics,
Monetary and
Financial
Systems, and
Research
Departments were
involved.
Leading
academics and
practitioners
made
presentations
and took part in
free-ranging
discussions. The
workshop was
chaired by
Stanley Fischer,
Vice Chairman of
Citigroup and
former IMF First
Deputy Managing
Director. How to
measure
accurately the
scope of
microfinance
remains under
discussion, and
the IMF
continues to be
committed to
finding ways to
be helpful and
supportive. The
Fund will also
be involved in
other UN-led
activities
during 2005 as
part of the
International
Year of
Microcredit.
- On November
11, Deputy
Managing
Director,
Agustín Carstens,
met with the
President of the
Pontifical
Council for
Justice and
Peace,
Renato Cardinal
Martino in Rome,
Italy. The
Deputy Managing
Director also
met with several
Italian NGOs.
- On November
16-17, IMF
Executive
Directors and
staff
participated in
the first of
four global
Multistakeholder
Consultations on
Systemic Issues
held in the
IMF's
headquarters.
The
consultations,
organized by the
New Rules for
Global Finance
Coalition, are
designed to
provide input to
the High-Level
Dialogue on
Financing for
Development, as
part of the June
2005 follow-up
to the 2002 UN
Conference on
Financing for
Development,
held in
Monterrey. These
sessions
provided a forum
to discuss
issues on
development
finance,
systemic
stability, and
poverty
reduction
issues.
Participants
were from a
variety of civil
society groups,
the
International
Financial
Institutions,
government
representatives,
and academics.
The next two
consultations
are scheduled to
take place in
Lima, Peru on
February 17-18
and in Nairobi,
Kenya in March.
- On November
19, David Coe of
the Asia and
Pacific
Department, Jon
Shields of the
African
Department, and
Andy Berg and
Amber Mahone of
the Policy
Development and
Review
Department, met
with Global
Witness
Director Simon
Taylor and Mike
Davis of Global
Witness
Cambodia.
Discussions
focused on the
recent Global
Witness report "Taking
a Cut" about
corruption in
the Cambodian
logging
industry, and
macroeconomic
conditions in
Cambodia and
Angola.
-
Hiroyuki Hino,
Director of the
IMF Regional
Office for Asia
and the Pacific,
participated in
a special
session of the
18th Quadrennial
Congress of the
International
Confederation of
Free Trade
Unions
(ICFTU), held in
Miyazaki, Japan,
from December
5-10. The
session,
entitled
"Tackling
Injustice and
Poverty," was a
panel discussion
focused on the
UN Millennium
Development
Goals. The other
panelists were
Salil Shetty,
Director of the
UN Millennium
Development
Goals Campaign,
and Louise
Richards, of
Solidar. The
moderator was
Aidan White,
General
Secretary of the
International
Federation of
Journalists.
- Robin
Robison of
U.K.-based
Quaker Peace and
Social Witness
met with
Nicaragua
mission chief
Nigel Chalk and
with Uganda
mission chief
Jean Clément on
January 10 to
discuss the
economic
situation in
each country, in
particular
HIPC-related
spending and the
overall
macroeconomic
outlook. Robison
also met jointly
with Jo Marie
Griesgraber of
the New Rules
for Global
Finance
Coalition
with Robert
Gillingham of
the Fiscal
Affairs
Department's
(FAD) Poverty
and Social
Impact Analysis
(PSIA) group,
for an overview
of the Fund's
PSIA activities.
- On January
27, FAD and EXR
hosted a
presentation by
Pamela Gomez of
the Center on
Budget and
Policy
Priorities,
and author of "Opening
Budgets to
Public
Understanding
and Debate:
Results from 36
Countries."
The study
provides a cross
country analysis
of transparent
budget practices
most important
for civil
society
involvement in
budget
preparation and
implementation.
Going forward,
the study will
expand to
analysis
covering 60
countries.
Günther Taube of
FAD's Fiscal
Transparency
Unit chaired the
meeting.
- Some 50
faith and
development
leaders gathered
in Dublin in
late January for
a meeting hosted
and chaired by
World Bank
President James
Wolfensohn, Lord
George Carey
(former
Archbishop of
Canterbury), and
Archbishop
Martin of
Dublin. The
meeting
addressed links
between poverty,
social tension
and
marginalization,
and global
security, within
the context of
"mounting global
inequities."
Graham Hacche,
Deputy Director
of the IMF's
External
Relations
Department,
attended on
behalf of
Managing
Director Rodrigo
de Rato.
Interest was
expressed by
some
participants in
IMF-related
issues such as
debt relief and
the Poverty
Reduction
Strategy (PRS)
process.
Participants
agreed that the
World Faiths
Development
Dialogue
(WFDD) should
continue, and
the aim is to
work out
arrangements and
financing for
the secretariat
over the next
six months.
During
discussion the
Fund indicated
its interest in
continuing to
develop its role
in the dialogue.
- On February
3, the French
government's
consultative
agency, the
Haut Conseil de
la Cooperation
Internationale
(HCCI) organized
a Forum with
CSOs, with the
support of the
French
authorities and
the OECD
Development
Assistance
Committee (DAC),
to prepare for
the Paris
High-Level Forum
on Aid
Effectiveness to
be held at the
end of February.
DAC delegates,
NGOs, and labor
union
representatives
compared their
analyses of
harmonization
and alignment;
mutual
accountability
and
transparency;
the
participatory
approach in
development
cooperation; and
the role of NGO
networks and
national
platforms. Sonia
Brunschwig,
Senior Economist
in the IMF
Offices in
Europe, attended
the afternoon
session,
together with
World Bank
colleagues.
- Philippe
Callier, IMF
Resident
Representative
in Mauritania,
participated in
a workshop on
the Challenges
of Globalization
in Mauritania on
February 3-5.
The workshop,
held in
Mauritania's
capital
Nouakchott, was
organized by the
International
Confederation of
Free Trade
Unions
(ICFTU) and the
Confedération
Générale des
Travailleurs de
Mauritanie
(CGTM), a local
trade union
affiliated with
the ICFTU. Other
participants
included
representatives
from the United
Nations
Development
Programme
(UNDP), the
World Bank, and
Mauritania's
Ministry of
Labor.
Back to Table of
Contents
Selected
speeches
-
Shared
Experience: What
Reforming
Economies Have
in Common,
remarks by Anne
O. Krueger,
First Deputy
Managing
Director, at a
Public Lecture
of the National
Council of
Applied Economic
Research
(NCAER), Delhi,
India, January
14, 2005,
-
Expanding Trade
and Unleashing
Growth: The
Prospects for
Lasting Poverty
Reduction,
remarks by Anne
O. Krueger,
First Deputy
Managing
Director, at the
IMF Seminar on
Trade and
Regional
Integration,
Dakar, Senegal,
December 6, 2005
-
Tackling Poverty
and Delivering
Growth: The
Importance of a
Sound Financial
System,
remarks by Anne
O. Krueger,
First Deputy
Managing
Director, to the
Lagos Business
School, Lagos,
Nigeria,
December 4, 2005
-
The IMF: The Way
Forward,
remarks by
Rodrigo de Rato,
Managing
Director, at the
University of
Oviedo, Oviedo,
Spain, November
24, 2004
Back to Table of
Contents
Selected
publications
-
The Political
Economy of
Revenue-Forecasting
Experience from
Low-Income
Countries,
by Stephan
Danninger, M.
Cangiano,
Annette Kyobe,
Fiscal Affairs
Department,
Working Paper
No. 05/2
-
The IMF's Role
in the Fight
Against HIV/AIDS,
Factsheet
-
IMF
Macroeconomic
Research on
Low-Income
Countries,
prepared by the
Fiscal Affairs,
Policy
Development and
Review, and
Research
Departments
-
From Fixed to
Float:
Operational
Aspects of
Moving Toward
Exchange Rate
Flexibility--November
19, 2004,
prepared by the
Monetary and
Financial
Systems
Department
-
Draft Guide on
Resource Revenue
Transparency
-
Local Financial
Development and
the Aid-Growth
Relationship
, by Mwanza
Nkusu, Selin
Sayek, African
Department,
Working Paper
No. 04/238
-
Social Spending,
Human Capital,
and Growth in
Developing
Countries:
Implications for
Achieving the
MDGs, by
Emanuele
Baldacci,
Benedict J.
Clements,
Sanjeev Gupta,
Qiang Cui,
Fiscal Affairs
Department,
Working Paper
No. 04/217
-
Are There
Negative Returns
to Aid? A
Comment,
Mwanza Nkusu,
African
Department
Working Paper
No. 04/212
-
Health and
Development: Why
Investing in
Health is
Critical for
Achieving
Economic
Developmental
Goals,
Finance and
Development.
Jeremy Clift,
Ed.
Back to Table of
Contents |
|
Recent Developments in
IMF-CSO Relations
The 2004 IMF-World
Bank Annual Meetings
were the first for the
IMF's new Managing
Director Rodrigo de Rato,
who assumed his post in
June. The meetings also
marked the 60th
anniversary of the
Bretton Woods agreement
on the founding of the
IMF and World Bank. The
meetings came after a
period of extensive
travel by de Rato,
including two visits to
Africa and one each to
Latin America and Asia,
that allowed him the
opportunity to hear wide
ranging views on the
global economy, issues
facing developing
countries, and the role
of the Fund.
In his
speech to the
meetings, de Rato
described his developing
perspectives. On the
question of how to
address the needs of the
low-income countries, de
Rato focused on the
Fund's core
expertise-the provision
of policy advice to
achieve macroeconomic
stability-and on the
need for increased trade
liberalization,
particularly through the
Doha round, and
increased aid from the
advanced economies:
We have seen
encouraging results
where such stability
has been complemented
by structural reforms
and by targeting
public spending to
areas of greatest
benefits to people.
Mozambique, Tanzania,
and Uganda have seen
sustained improvements
in economic
performance. Growth
rates have also picked
up in other African
countries that have
made progress in
curbing inflation and
establishing better
control of the public
finances. Where such
improvements in
policymaking are
evident, developed
nations should fulfill
their end of the
bargain by
liberalizing trade and
delivering aid. They
should improve access
to their markets for
developing countries'
exports and dismantle
trade-distorting
subsidies. There must
also be increased aid,
not just for the
countries under the
HIPC Initiative but
for others as well. In
some countries, we are
indeed seeing larger
inflows of foreign
assistance, including
to combat HIV / AIDS.
Other ideas for
increasing aid for
low-income members,
including deeper debt
relief and increased
grant financing, are
needed and welcome.
The Fund is ready to
help design polices
that would help
countries make the
most effective use of
these increased
resources. Better aid
coordination among
donors, and multi-year
commitments, are also
needed to make
development assistance
more effective. But,
first and foremost, we
need to increase aid
levels
The Annual Meetings
also offered the
opportunity for
representatives of civil
society organizations
(CSOs) to sit down with
staff members from the
Bank and the Fund to
discuss a range of
issues of mutual
concern. About 150
people from
organizations in 30
countries attended the
civil society dialogues,
including the second
annual townhall meeting
with leaders of the two
institutions. But recent
contacts have not been
confined to the Annual
Meetings. Immediately
after that gathering,
top officials of the
Fund and Bank met with
representatives of the
international labor
movement. Later in
the month leaders of the
Bretton Woods
organizations met with
leaders of the
World Council of
Churches in Geneva.
Back
to Table of Contents
Feature Article:
High-level
meeting of the World
Council of Churches,
World Bank, and
International Monetary
Fund
The first ever
meeting of the leaders
of the World Council of
Churches (WCC), IMF and
World Bank took place on
October 22 at WCC
headquarters in Geneva.
The main speakers
representing the three
organizations were World
Bank President James
Wolfensohn, IMF Deputy
Managing Director
Agustín Carstens, and
WCC General Secretary
Rev. Dr. Samuel Kobia.
The meeting was
moderated by Cornelio
Somarruga of the Caux
Initiatives for Change
and former President of
the International
Committee of the Red
Cross, and also
addressed by Dr. Agnes
Abuom, President for
Africa of the WCC. IMF
Managing Director
Rodrigo de Rato was
unable to participate in
the meeting because of
an official commitment,
but participated in a
private meeting earlier
in the day with Kobia,
Abuom, Wolfensohn, and
Carstens. The afternoon
meeting, in which a
number of other
representatives of the
three organizations
participated, followed
several preparatory
meetings held since May
2002 (see Civil Society
Newsletter
April 2003 and
February 2004). The
meetings were initiated
after the management of
the two Bretton Woods
Institutions (BWIs)
expressed a wish to
engage in dialogue with
the WCC to improve
mutual understanding of
the organizations' work
in development.
The meeting focused
on establishing common
ground for efforts to
address global poverty,
and on exploring
continuing areas of
difference in approach
and views on development
issues. The session
concluded that the areas
of common ground are
large and significant,
and that the three
institutions should find
more effective ways to
work together in the
future. There was
agreement that the
dialogue process would
continue, and that it
would focus in the
period immediately ahead
on case studies that
could be expected to
clarify issues and
specific topics that
lend themselves to
common action.
The meeting was
characterized by a frank
and generally positive
exchange of views. In
his formal statement,
Kobia stressed the issue
of voice-in his view the
WCC has always
represented the
voiceless-and the need
for a world economy that
places people at the
center of development.
Growth is not enough, he
said; we must deal also
with the issues of
inequality. Kobia
concluded by focusing on
the issues of
environmental protection
and the democratization
in the BWIs.
Abuom said that
poverty is caused by a
failure of brotherly
love in the world. The
WCC is concerned with
the need to change the
market system, and has
not succeeded in
persuading the BWIs of
this need. Increased
trade alone does not
reduce poverty or
improve equity, she
said; there is a need
for redistributive
measures, and the world
needs just,
participatory, and
sustainable communities.
She criticized the BWIs
as undemocratic: with
Africa having only two
Executive Directors, the
institutions are
essentially a platform
for the industrial
countries. Highlighting
the issues of human
rights, she called on
the BWIs to look more to
their work through a
rights-based framework.
In sum, she said, the
dialogue must continue.
Wolfensohn reiterated
his deep conviction
about the critical role
of religions in the
issues of development.
He said he has spent
eight years trying to
build bridges with
faith-based
institutions. He
highlighted his concerns
regarding the role of
youth, gaps between rich
and poor, and too much
focus on the short-term
concerns of security
versus the long-term
problems of poverty. We
are, he stressed, facing
a serious crisis of
inaction after so many
promises and
commitments. Wolfensohn
said he was deeply
troubled by the WCC's
2002 publication "Lead
us not into Temptation",
which he said presented
an inaccurate picture of
the World Bank and its
mission, work and staff.
He focused also on how
the Bank approaches
issues of human
rights-largely through
its actions. He noted
that the issues of
governance-representation
and voice-in the BWIs
were issues for the
shareholders, not for
management. In
concluding, he called
for a two-year amnesty
between the WCC and the
BWIs and a determination
to work together on the
issues of poverty.
Carstens reviewed the
mandate and role of the
IMF, describing its work
in surveillance-the
regular monitoring and
consultation of each
member country's
economy-and in managing
crises. The IMF is
charged partly with
helping governments to
make difficult decisions
in difficult times. He
noted misconceptions
about its role and work.
He discussed the Poverty
Reduction Strategy
process and its origins.
He emphasized the
progress made through
the dialogue process as
a result of the hard
work of the staffs of
the three institutions.
He saw much to be hoped
for in the common ground
identified.
The ensuing
discussion included some
frank exchanges on
governance of the IFIs;
the "disciplinary role"
of the IMF; the role of
the Bank and Fund in
dealing with indigenous
peoples; and on
innovative sources of
development financing.
The conclusions focused
on the importance of
using the MDG framework
as a vehicle for
mobilization and action.
There was also
discussion of equity
issues. Kobia and Abuom
focused in their
concluding comments on
the path traveled
together and on the
common cause that linked
the three institutions.
After the meeting,
the leaders of the three
organizations issued a
joint statement,
calling the discussions
significant and useful.
The statement links to a
more detailed paper on
Common Ground and
Differences of View
between the Bretton
Woods Institutions (IMF
and World Bank) and the
World Council of
Churches, prepared
by the staff involved in
the discussions. This
innovative paper aims to
set out clearly areas of
agreement and
disagreement between the
BWIs and the WCC.
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The
2004 Annual Meetings:
Civil society
dialogues at the Annual
Meetings
The civil society
dialogues at the 2004
IMF/World Bank Annual
Meetings focused on the
role of the Bretton
Woods Institutions
(BWIs) in low-income
countries-in particular
in facilitating debt
relief and promoting
debt sustainability-and
the status of the
Poverty Reduction
Strategy Papers (PRSP)
process. Many of the
meetings were organized
by the IMF and World
Bank, but several events
were sponsored by CSOs.
The highlight was a CSO
townhall meeting that
brought together the
heads of the IMF and
World Bank as well as
the Chairmen of the
Development Committee
and the IMFC.
Participating were
nearly 150
representatives of NGOs,
labor unions,
faith-based groups, and
foundations from over 30
countries, all of whom
were accredited to the
2004 Annual Meetings.
The full list of
dialogues as well as
minutes of most sessions
will be available at
http://www.worldbank.org/civilsociety.
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Townhall
meeting with CSOs
Most of the
accredited CSO
representatives
participated in the
September 30
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
Development Committee;
IMF Managing Director
Rodrigo de Rato; and
World Bank President
James Wolfensohn. This
was de Rato's first
meeting with global
CSOs, after meeting
local CSOs on recent
trips to Africa and
Asia. At last year's
Annual Meetings in Dubai
former Managing Director
Horst Köhler
participated in a
similar
session. This year's
meeting was chaired by
Aruna Rao, Director of
Gender at Work, and
Chair of the Board of
Directors of CIVICUS.
Speaking first,
Chancellor Brown said
that if the Millennium
Development Goals (MDGs)
are to be met, the
international community
will have to
dramatically increase
the amount of
development aid that is
available in the next
few years. He said that
on present trends,
countries in sub-Saharan
Africa will achieve the
MDGs only by the year
2130-115 years late. "We
must find better methods
of financing development
aid so that the great
combination of economic
development, trade, and
development aid make it
possible to have a world
economy working for all
of the people all of the
time," Brown said.
If multilateral debt
relief is to match
bilateral debt relief,
additional money will
have to be generated, he
said, noting that the UK
has suggested that a
revaluation of IMF gold
reserves could take
place again. He said
there is undoubtedly
scope for action without
affecting the integrity
of the IMF's reserves or
the gold market. There
can be a move forward
under the leadership of
the World Bank and the
IMF, if the member
countries have the will
to do so, Brown
concluded.
De Rato told CSOs
that the IMF's gold
reserves have been used
as recently as five
years ago to generate
funds, and that
repeating that exercise
depends on the will of
the IMF Executive Board
and not of IMF
management. If the
political will exists to
use the gold, he said,
the Fund would find the
technical means to
achieve the objective.
He told CSOs the IMF has
a close relationship
with civil society and
that the Fund needs a
regular exchange of
views with CSOs to
perform its
responsibilities.
Discussing the IMF's
involvement in
poverty-reduction
efforts and debt relief,
de Rato said one of the
major challenges from
the 2004 IMF-World Bank
Annual Meetings was for
countries to step
forward to increase
aid-through some of the
new mechanisms that are
being discussed, but
also through traditional
channels.
Manuel told the
meeting that South
Africa's gold mining
industry employs tens of
thousands of workers
from South Africa and
neighboring countries,
and it has experienced
significant job losses.
He insisted that South
Africa needs to be heard
in any discussions on
the sale or revaluation
of gold reserves. He
said his concerns center
less on prices than on
volatility that could
cause job losses
affecting poor
countries. Answering a
question from Jubilee
Iraq on the cancellation
of odious debt, Manuel
said the issue is a very
tough call. He asked who
would make the
determination of whether
debt is odious: if
Iraq's debt is deemed
odious, why would that
decision not apply also
to the Democratic
Republic of Congo?
Manuel said there should
be rules on the issue
that apply equally to
all aspects of the work
of the Bank and the Fund
and that do not create
moral hazard.
James Wolfensohn said
any fair assessment of
the Bank's reaction to
the Extractive
Industries Review of
World Bank investments
in oil, gas, and mining
will conclude that the
Bank has come a very
long way. He said a
campaign launched
against the Bank has
claimed that "if you
don't do 100 percent,
you're doing nothing"
and this is not right.
The Bank believes it
would be wrong for the
institution to withdraw
from coal, oil, and gas
investments and has made
a significant
contribution to cleaning
up such projects. The
Bank has an important
influence on the
projects' environmental
standards.
In response to a
statement from the floor
on voice and
representation in the
BWIs, Manuel said the
issue is "an ongoing
battle" that addresses a
"deficit of democracy"
in the institutions.
Poor countries are
inadequately
represented, and it has
to be asked whether the
Bank and the Fund are
part of the multilateral
system or merely
arrangements between
debtors and creditors.
Other topics raised
in the Q&A session
included women's
participation and
visibility in the MDGs;
World Bank
conditionality; CSO
accreditation to the
Annual Meetings;
corruption; and
Argentine debt.
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An update on
the IMF's role in
low-income countries
At a September 30
meeting on the IMF's
role in low-income
countries (LICs), Policy
Development and Review
Department (PDR)
Assistant Director Mark
Plant told CSOs that the
right place to have a
conversation between
CSOs and the government
is in the participatory
Poverty Reduction
Strategy Paper (PRSP)
process. Plant said that
a PRSP process ideally
would lead to a policy
program supported by the
Poverty Reduction and
Growth Facility
(PRGF)-the IMF's
low-interest lending
facility for LICs- but
that in reality this
sequence does not always
occur. The goal remains,
however, of better
aligning the two
processes.
Participants in PRGF
program negotiations
(the IMF and the
government), he said,
need a system under
which discussions on the
PRSP can inform the
preparation of the PRGF,
which in turn can come
back and inform
subsequent discussions
on the PRSP. The Fund
and Bank hope to make a
move in that direction,
Plant said, by
transforming the
Joint Staff Assessment
(JSA) into the new Joint
Staff Advisory Note
(JSAN). The JSAN is
intended to provide
advice and feedback from
the Boards of the Bank
and Fund to the
authorities on a
country's poverty
reduction strategy,
rather than making a
snap judgment on whether
or not PRSP was a sound
basis for offering
concessional support.
Plant stressed that the
Fund would now make its
assessment of a
country's macroeconomic
framework public,
instead of making
implicit criticism. A
country's proposed macro
framework might be
aspirational, but the
Fund could observe that,
in its view, the
framework was
unattainable in, say the
next two or three years,
and explain why. This
would stimulate a debate
that should be more
fruitful for all
participants in the
process. People on each
side of the debate would
know exactly what the
other side was thinking.
The Fund's intention is
to put the participatory
process where it
belongs-in the PRSP-and
at the same time ensure
the PRGF is sensitive to
the agreements reached
in the participatory
process.
A questioner from the
floor noted that exactly
five years have passed
since former Fund
Managing Director Michel
Camdessus said in a
speech at the 1999
Annual Meetings that it
was time to respond to
"the cries of the poor."
The panel was asked
whether the Fund has
indeed responded to such
pleas. Another
questioner asked whether
the IMF is really a
pro-poor institution if
it took the Fund five
years to make statements
of commitment to LICs
and to include poverty
and social impact
assessments (PSIAs) in
the Fund's work. Staff
at the meeting noted
that programs supported
by the IMF now include
such pro-poor elements
as specified levels of
social or health
spending; social
components in national
budgets; poverty
targets; and social
goals. Also, the Fund
now publicly counsels
against wasteful
spending such as
purchases of
presidential jetliners.
Fiscal Affairs
Department Deputy
Director Peter Heller
stressed that although
the IMF has been
criticized as being
overconcerned about
inflation, it is the
poor who bear the worst
effects of runaway price
increases. He said the
IMF would not agree to
20 percent inflation,
which would mean prices
doubling every three
years. This is because
the poor would be the
most affected, while
those with assets or
good incomes usually
have hedges against
inflation.
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Other CSO
policy dialogues
- An October 1 panel
initiated by ActionAid
USA, Christian Aid,
and World Vision on "Integrating
HIV Into Economic
Policy Making,"
discussed three CSO
studies on HIV/AIDS
issues. Several Fund
and Bank staff
participated, but CSO
attendance was
extremely low. The
Fund was represented
on the panel by
Godfrey Kalinga,
Division Chief in the
African Department and
Kenya mission chief.
The session followed
the release of a
Fund response to
the ActionAid paper,
and focused on the
tensions between the
health and education
needs of developing
countries and the
budgetary constraints
that governments face.
- World Bank and IMF
staff discussed with
CSOs the "HIPC
Initiative, Debt
Sustainability and
Other Emerging Issues"
at a panel
discussion on October
1. CSOs
criticized HIPC for
failing to deliver on
its promises and urged
that the debt
sustainability
framework be linked to
the analysis of the
financial needs for
reaching the MDGs. The
Fund was represented
by PDR Department
Assistant Director
Mark Plant.
- On October 4
InterAction hosted two
panel discussions on "Taking
Stock of the PRSP
Process and Looking
toward the Future".
The first session
focused on the recent
evaluations of the
PRSP process by the
IMF's Independent
Evaluation Office
(IEO) and the World
Bank's Operations
Evaluation Department
(OED). IEO Acting
Director David
Goldsbrough spoke. The
second panel addressed
emerging PRSP issues
including process,
implementation, and
the upcoming 2005
Progress Report. PDR
Department Assistant
Director Mark Plant
presented the Fund's
perspective.
- An October 6
discussion on
"Revenue Transparency
and the Role of
Multilateral
Development
Institutions" at
the World Bank, the
International Finance
Corporation (IFC), and
the IMF, organized
jointly with the Bank
Information Center
(BIC), drew about 50
participants. The
meeting addressed the
role of CSOs in
revenue oversight; the
status of the IMF
Guide on Resource
Revenue Transparency;
the Extractive
Industry Transparency
Initiative (EITI); and
next steps on
supporting revenue
transparency through
IFI activities. The
Fund was represented
by staff from the
Policy Development and
Review, Fiscal
Affairs, African, and
Middle East and
Central Asia
Departments.
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Civil Society-IMF
Dialogue:
IMF and World
Bank meet with union
leaders
IMF and World Bank
management, Executive
Directors and staff met
with leaders of the
international labor
movement on October 6-8
to discuss a range of
issues. The meeting in
Washington, D.C. focused
on efforts to reduce
poverty and achieve the
Millennium Development
Goals (MDGs); there was
also discussion of ways
to enhance employment
opportunities and social
inclusion, and reduce
inequalities. The
gathering was the second
in a biennial series
instituted in 2002 (see
Civil Society Newsletter
January 2003), and
built upon a dialogue
begun more than a decade
ago by the IMF's then
Managing Director Michel
Camdessus.
The labor union
delegation included over
80 representatives of
national and
international labor
federations, which have
nearly 200 million
members. It was headed
by Guy Ryder, General
Secretary of the
International
Confederation of Free
Trade Unions (ICFTU),
and Willy Thys, General
Secretary of the World
Confederation of Labor
(WCL). Representatives
from Global Unions
Federations and the
OECD's Trade Union
Advisory Committee also
attended. Willy Kiekens,
IMF Executive Director
from Belgium, whose
constituency includes
several European
countries, as well as
Turkey and Kazakhstan,
chaired the main session
held at IMF headquarters
on October 7. The
AFL/CIO hosted the
sessions held on October
6, and the World Bank
those on October 8.
In his introductory
remarks for the session
at IMF headquarters, IMF
Managing Director
Rodrigo de Rato welcomed
the dialogue, noting
that in many countries
organized labor is an
important and sometimes
indispensable instrument
for social change. In a
world characterized by
fast-moving
transformation,
countries must adapt, he
said. This often
requires dealing with
such challenges as aging
populations, the need to
modernize labor markets,
and the liberalization
of trading systems. The
participation of civil
society-including labor
unions, which are among
the oldest and most
experienced contributors
to the civic process-in
these economic and
social debates can
strengthen the consensus
on difficult policy
choices; and the IMF has
become increasingly
aware of the importance
of ownership of economic
policies. De Rato also
observed that strong
global expansions such
as the current one
provide a timely
opportunity to undertake
reforms, since changes
in behavior are easier
to bring about during
economic recoveries.
The trade union
delegation said that
despite the IMF's upbeat
assessment of the global
economy, most developing
countries will fail to
achieve the MDGs by a
wide margin. If progress
toward these goals is to
be accelerated, the
international community
must take more ambitious
steps on debt relief and
consider the various
initiatives being
proposed-including some
form of global
taxation-to raise extra
funding. They took note,
however, of de Rato's
observation that the
problem with obtaining
new resources is
political, not
technical.
The labor union
leaders also stressed
that poverty reduction
depends on implementing
the right policies. In
their view, the Bretton
Woods Institutions'
emphasis on pro-growth,
market-oriented economic
liberalization is
inadequate "because
growth is not enough."
They argued that too
little attention is paid
to employment, wages,
and social protection;
growth must be
accompanied by "decent"
job creation and an
increase in social
security and justice.
The union
representatives welcomed
the more systematic
consultations taking
place with local unions
during the IMF's annual
Article IV consultations
with individual
countries, and on other
missions. But they
called for greater
involvement of local
unions in the
development of poverty
reduction strategies in
low-income countries.
IMF representatives
pointed out that the
decision on whom to
consult is made chiefly
by governments.
Many union
representatives said the
Fund's recommendations
to countries on labor
market reform remained a
point of contention.
They expressed concern
that the IMF calls for
greater labor market
flexibility regardless
of a country's
circumstances. This,
they said, tends to
result simply in
deregulation and
increased social
insecurity. The union
leaders urged greater
consultation with unions
to promote a less
disruptive restructuring
of the labor market.
The union leaders
also met with World Bank
president James
Wolfensohn, who
emphasized that labor
issues were central to
development. He said,
for example, that the
demographic challenge
posed by one billion
young people worldwide
entering the work force
in the near future
presents a monumental
opportunity-or risk of
crisis. Creating
productive employment
for this generation was
key not only to growth,
but also to stability
and hope, and thus
ultimately to peace. On
more specific points,
Wolfensohn reported that
recent World Bank
reports promote job
creation above all as
the key to improving the
business climate; and
that core labor
standards (CLS) are now
being promoted by the
Bank, though not yet as
conditions in its
lending. He also
welcomed the report of
the International Labour
Organization's (ILO)
World Commission on the
Social Dimension of
Globalization for its
contribution to global
policy discussions,
noting the Bank's
involvement in the
production of the report
and its continued
commitment to following
up on its
recommendations.
Topics discussed at
sessions with staff
included IFI policies
and programs on trade;
Bank-Fund work in
low-income countries;
labor and employment
issues in PRSPs;
incorporation of core
labor standards into
World Bank lending; the
report on the Social
Dimension of
Globalization; the World
Bank's approach to
social protection; and
trade union
contributions to meeting
the MDGs. Union leaders
also met separately with
IMF and World Bank
Executive Directors.
A more complete
summary record of the
discussion will be
released in the coming
months.
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Letters from the Field:
Saturday with
the survivors
Kenneth Meyers, former
Rwanda Mission Chief
(May 2001 - September
2004)
It was a sunny
Saturday morning when we
left Kigali's asphalt
avenues, and bounced for
a few minutes across
bone-dry, dirt roads to
our destination. Waiting
for us was Jean Marie,
the Secretary of the
Fund for the Needy
Victims of Genocide and
Massacres, with two
young men and a young
woman. Our first stop
was a settlement of 84
"families" (totaling
some 400 young men and
women) whose relatives,
nuclear and extended,
had been destroyed in
Rwanda's 1994 genocide,
as had their hopes for a
normal life. The
families were groupings
of 6 to 8 teenagers,
generally aged 15 to 18.
Some of the families
consisted of relatives
(brothers, sisters and
cousins), while others
had come together with
necessity as the only
guide.
We walked down the
road to one of the
houses. We were greeted
by a young girl sitting
on a step, washing a
blouse in a plastic
bowl. Another housemate
joined us, then a few
more, and we entered
their home. It was
sparse: cinderblock
walls, no lights (not
even a candle), no
curtains, and one
rudimentary chair. The
two bedrooms were
similarly spare-just a
mattress on the floor.
We were told that this
room could sleep five
people, sleeping waist
up across the mattress.
Jean Marie told us that
this family was lucky.
They at least had a
place to call home, a
place where they
belonged. Ten years
after catastrophe struck
Rwanda 40,000 genocide
survivors still are
living day to day with
no permanent dwelling.
We spoke briefly with
the head of the
household that we were
visiting. He had
finished a vocational
training program but had
been unable to find work
in the past year. When
we asked how the family
was able to feed itself,
we were told, "with the
help of God." It seemed
that there was a limit
to their luck.
We stepped outside
and talked with some of
the neighboring families
about their hopes. "We
hope to finish school,
to get professional
training, to enter the
university, if it is
possible," one person
said. We learned that
for those lacking an
education, there is
little hope. Yet,
completing school is no
easy task. Without
electricity or a candle,
the children cannot
study after nightfall.
Since Kigali is at the
Equator, darkness
arrives around 6:30 each
evening. The teenage
family heads do their
best, but life is hard
for everyone, and the
idea of a parent helping
the younger children
with their homework was
far removed from their
experience. There are no
guarantees for those who
do manage to graduate.
We were introduced to a
young woman with a
radiant smile who had
recently received a
degree from a university
in India. She said that
she was worried. She had
no job prospects. Would
she be able to find
work? We all assured her
that she would succeed.
No guarantees.
We said goodbye and
set off to a block of
buildings further down
the road. Here the Fund
for Genocide Survivors
had built simple homes
for widows of the 1994
killings. Some 800
widows and their
children (some natural
and others acquired out
of the moment's
necessity) had been
settled here. The
cinderblock homes, we
were told, were put up
quickly, and with little
supervision. Some of
them appeared to be in
poor condition;
occupants had obviously
made improvements to
others. We walked up to
one of the more
attractive dwellings-the
windows were curtained
and its walls had been
painted-and were greeted
by a mother. Unlike our
previous encounter,
there was no warmth in
this meeting. Civil, but
with a stony stare, she
motioned to the small
refuge that she had
managed to put together.
It seemed clear that the
dark nights of her past
had stolen away more of
her life than she could
bear. A small room had
been turned into simple
store, selling soap and
other sundries. The
store also contained a
water tap, firmly
secured by a lock. In
this parched quarter
piped water is for those
who can pay. An older
widow whom we met on the
road, leaning wearily on
a staff, explained that
she had no family, and
the walk to the public
water source, a
kilometer away, had
become a great strain.
We had entered the
purgatory of the
innocent.
The paralyzing spell
of the moment was broken
by the laughter of
children. Mostly ragged,
they were, nonetheless,
radiant. They spoke the
universal language of
karate motions and happy
cries. A discreet wave
to a beaming young boy
was returned, timidly,
in kind. The IMF mission
team members were an
exciting curiosity. In
this mostly barren
world, novelty is
entertainment.
When we retraced our
steps back to Kigali
later in the day, we
carried a new window
onto a painful piece of
humanity. In parting,
Jean Marie thanked us.
Ten years on, he noted,
the outside world had
come to see the
survivors of the
genocide as just another
wave in the broad sea of
the disadvantaged.
"Please," he asked,
"help us to be
remembered."
Editor's Note:
In the period
following the 1994
genocide, the IMF
actively supported
Rwanda in restoring
macroeconomic stability
and the foundations for
economic growth and
poverty reduction,
including through
financial assistance,
debt relief, and
technical assistance to
reestablish its
macroeconomic
institutions.
Back
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Other recent
meetings between the IMF
and CSOs
- David Goldsbrough,
Acting Director of the
Independent
Evaluation Office
(IEO), and his staff
met CSOs to discuss
the IEO's recent
evaluation of the
Poverty Reduction
Strategy Papers
(PRSPs) and the
Poverty Reduction and
Growth Facility (PRGF)
(see
Civil Society
Newsletter August 2004)
on August 10. The
discussion mostly
focused on the IEO's
finding that "most
PRSPs fall short of
providing a strategic
road map for policy
making, especially in
the area of
macroeconomic and
related structural
policies." Goldsbrough
also participated in a
similar meeting for
European NGOs
organized by
Eurodad in
Brussels on September
21.
- On September 9,
Jean-Pierre Chauffour,
IMF Representative to
the WTO, participated
in the
International Jesuit
Network for
Development (IJND)
Conference: Debt and
Trade: Time to Make
the Connections in
Dublin, Ireland.
- The IMF UN Office
participated in a
September 9 conference
in New York on
"Country Ownership and
Poverty Reduction-The
Role of PRSPs in
Financing for
Development," which
was organized by the
Friedrich Ebert
Foundation in
cooperation with the
UN Financing for
Development Office.
The event was attended
by representatives of
UN member states,
civil society,
academia, and
international
organizations. Tsidi
Tsikata, Senior
Economist at the IEO,
discussed the IEO's
PRSP/PRGF evaluation.
Mark Plant, Assistant
Director Policy
Development and Review
Department, presented
the Fund's
perspective. He also
participated in a
panel entitled
"Millennium
Development Goals,
Health, and
Development Policy"
organized by the World
Health Organization in
the context of the
annual DPI/NGO
conference at the UN.
- On October 13,
Andrew Berg, Division
Chief PDR,
participated in a
panel discussion in
New York on the theme
of remittances
by emigrants as a
source of financing
for development, which
was held under the
auspices of the Second
Committee of the UN
General Assembly in
the context of
Monterrey follow-up.
- Simonetta Nardin,
IMF External Relations
Department,
participated in the
Forum 2000 Bridging
Global Gaps
conference held in
Prague October 15-17.
This year's conference
focused on "The Role
of the Civil Society
in a Globalized
World."
- On October 19, Dan
Citrin, Deputy
Director of the IMF's
Asia & Pacific
Department met with
Oxfam Great
Britain's Regional
Directors for South
Asia and East Asia at
IMF headquarters in
Washington.
Back
to Table of Contents
Inside the IMF
- IMF Managing
Director Rodrigo de
Rato appointed Michael
Kuhn as Director of
the Finance Department
to succeed Eduard
Brau, who has retired
after 35 years of
service with the IMF.
Kuhn, 54, a national
of Germany, has been
Deputy Director of the
Finance Department
(formerly Treasurer's
Department) since
1999. He joined the
Fund in 1983 and has
held senior positions
in area and functional
departments. Kuhn
holds degrees in
economics from Golden
Gate and Princeton
Universities
- IMF staff has
prepared a new
factsheet on "The IMF
and Civil Society
Organizations" (http://www.imf.org/civilsociety).
It serves as a
starting point for a
number of web pages
that are of interest
to CSOs and
researchers working on
CSO relations with the
IMF.
Back
to Table of Contents
Selected speeches
-
Remarks at a Meeting
with African Governors
of the IMF, by
Rodrigo de Rato,
Managing Director,
Washington, D.C.,
October 1, 2004
-
Remarks at the Summit
of World Leaders for
Action Against Hunger
and Poverty by
Rodrigo de Rato,
Managing Director, New
York, September 20,
2004
-
The IMF at 60:
Evolving Role, Current
Challenges,
remarks by Rodrigo de
Rato, Managing
Director, at the
Breakfast Meeting with
the Council on Foreign
Relations, New York,
September 20, 2004
-
A Partnership for
Growth and Poverty
Reduction in Africa,
remarks by Rodrigo de
Rato, Managing
Director, at the
Extraordinary Summit
of the African Union,
Ouagadougou, September
8, 2004
Back
to Table of Contents
Selected
publications
-
Debt Sustainability in
Low-Income Countries:
Further Considerations
on an Operational
Framework and Policy
Implications,
prepared by the Staffs
of the IMF and World
Bank
-
Operational Framework
for Debt
Sustainability in
Low-Income Countries:
Implications for Fund
Program Design,
prepared by the Policy
Development and Review
Department in
consultation with the
other departments
-
Sources of Growth in
Sub-Saharan Africa,
by Bernardin A.
Akitoby, Dhaneshwar
Ghura, Amor Tahari,
and Emmanuel Brou Aka,
African Department
-
Development Committee
Communiqué
-
Communiqué of the
International Monetary
and Financial
Committee of the Board
of Governors of the
International Monetary
Fund
-
Report of the Managing
Director to the
International Monetary
and Financial
Committee on the IMF's
Policy Agenda
-
Poverty Reduction
Strategy
Papers-Progress in
Implementation,
prepared by the Staffs
of the IMF and the
World Bank
-
Heavily Indebted Poor
Countries (HIPC)
Initiative-Status of
Implementation,
prepared by the Staffs
of the IMF and the
World Bank
-
The Role of the Fund
in Low-Income Member
Countries,
prepared by the Staff
of the Policy
Development and Review
Department
-
Report of the
Executive Board to the
International Monetary
and Financial
Committee (IMFC) on
Quotas, Voice, and
Representation,
prepared by the
Finance and
Secretary's
Departments
-
Microfinance in
Africa: Experience and
Lessons from Selected
African Countries,
by Anupam Basu,
Rodolphe Blavy, and
Murat Yulek, African
Department, Working
Paper No. 04/174
-
External Grants and
IMF Policies,
Issues Brief
-
Financing Uganda's
Poverty Reduction
Strategy: Is Aid
Causing More Pain Than
Gain? By Mwanza
Nkusu, African
Department, Working
Paper No. 04/170
-
Grants Versus Loans,
by Tito Cordella and
Hulya Ulku, Research
Department, Working
Paper No. 04/161
-
External Debt
Sustainability in HIPC
Completion Point
Countries, by Yan
Sun, Finance
Department, Working
Paper No. 04/160
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