At the
September
24-25
World
Bank-IMF
Annual
Meetings,
the
international
community
took a big
step
toward
delivering
on its
promise of
a
multibillion-dollar
debt
cancellation
plan for
the most
heavily
indebted
poor
countries
(HIPCs).
That was
originally
proposed
at the G-8
finance
ministers'
meeting in
London in
June and
endorsed
at the G-8
Summit in
Gleneagles,
Scotland,
in July.
Civil
society
organizations
(CSOs) who
had been
lobbying
for this
deal
during
2005,
welcomed
the
progress
at the
Annual
Meetings,
but are
waiting
for more
details to
become
public.
The
Governors
attending
the Annual
Meetings
also
encouraged
the Board
to
finalize
new tools
for IMF
cooperation
with
low-income
countries,
including
a new
financing
window and
a facility
that
targets
their
special
needs. An
article
gives an
overview
of these
new
instruments
as well as
an update
of other
developments
in the
IMF's work
on
low-income
countries.
Governors
also
endorsed
a
medium-term
strategy
for the
Fund that
has been
proposed
by
Managing
Director
Rodrigo de
Rato.
The
Annual
Meetings
traditionally
offer an
opportunity
for
representatives
of CSOs to
sit down
with staff
members
from the
Bank and
the Fund
in
meetings
organized
by both
institutions
and CSOs.
About 180
people
from
organizations
in 30
countries
attended
the
civil
society
dialogues,
including
the third
annual
Townhall
meeting
with
leaders of
the two
institutions.
For
some time,
the IMF
has been
considering
a number
of actions
it can
take to
better
serve its
low-income
members.
To this
end, the
Fund has
recently
undertaken
a thorough
reassessment
of its
engagement
with
low-income
countries
(LICs),
focusing
on making
its
lending
and policy
advice
more
responsive
to the of
needs LICs,
and on
better
defining
how it
engages
with
country
authorities,
other
multilateral
organizations
and
bilateral
donors,
civil
society
organizations,
and other
development
partners.
This
review has
resulted
in the
following
proposals:
- that
the
Poverty
Reduction
Growth
Facility
(PRGF)
should
remain
the main
instrument
for
assisting
low-income
members;
- that
a new
window
in the
PRGF
Trust
should
be
created,
whose
aim
would be
to help
low-income
members
facing
exogenous
shocks;
and
- that
a new
non-financial
mechanism,
the
Policy
Support
Instrument
(PSI)
should
be
established,
with a
view to
improving
the way
in which
the Fund
supports
and
signals
sound
policies.
The IMF
also is
reviewing
its role
in the
Poverty
Reduction
Strategy (PRS)
process,
and has
recently
reviewed
the design
of PRGF-supported
programs.
Finally,
once the
next stage
of
multilateral
debt
relief is
finalized,
that
program
will
provide
additional
resources
to LICs.
Reviewing
the
Poverty
Reduction
Strategy
framework
The IMF
is working
closely
with other
development
partners
to ensure
that the
PRS
framework
provides
an
effective
tool for
fostering
growth,
poverty
reduction,
and
progress
towards
the
Millennium
Development
Goals
(MDGs). To
these
ends, the
Fund plans
to review
its role
in the PRS
process
and the
interaction
of this
role with
its
financial
facilities
and other
forms of
interaction
with LICs.
A key
priority
is to
embed the
PRS
process
into
existing
domestic
decision-making
processes
and
systems,
including
the annual
budget,
and to
align PRSs
with
programs
supported
under the
PRGF as
well as
Fund
signaling
of its
support
for
policies
and Fund
support
for debt
relief.
The
2005
IMF/World
Bank
review of
the PRS
approach—"Balancing
Accountability
and
Scaling Up
Results"
—showed
that the
PRS
approach
has helped
put
poverty
reduction
at the
center of
the public
policy
debate in
LICs. The
elaboration
and
implementation
of PRSPs
was
associated
with
improvement
in some
socio-economic
indicators
in LICs,
especially
in Africa.
Looking
ahead, the
review
found that
the PRS
approach
could and
should
continue
to be the
operational
framework
for
expanding
efforts to
meet the
MDGs, and
for
translating
mutual
accountability
of country
authorities
and
development
partners
into
concrete
development
plans at
the
country
level.
The
Poverty
Reduction
and Growth
Facility
The
Poverty
Reduction
and Growth
Facility
(PRGF)
remains
the IMF's
main
facility
for
financial
assistance
to LICs.
Established
in
September
1999, the
PRGF aims
to make
poverty
reduction
and growth
the
central
objective
to the
Fund's
lending
operations
in its
poorest
member
countries.
PRGF-supported
policy
programs
are framed
around
comprehensive,
country-owned
PRSPs. In
order to
continue
the
provision
of
effective
support
for LICs'
efforts to
improve
macroeconomic
stability,
achieve
sustainable
growth,
and reduce
poverty,
the Fund
realizes
that it
must adapt
to the
evolving
needs of
its
members.
The Fund
recently
completed
its
review of
the design
of
PRGF-supported
programs
among
the more
economically
stable
low-income
members,
or "mature
stabilizers."
It found
that while
many LICs
still need
significant
macroeconomic
adjustment,
many
others
have
achieved
broad
macroeconomic
stability
and
sustained
growth,
often with
its
support.
The
recent
review
confirmed
the
importance
of
macroeconomic
stability
and an
open
economy
for
sustained
growth. It
highlighted
the
central
roles of
private
investment
and
exports,
and also
focused
attention
on the
importance
of sound
institutions.
It also
examined
how fiscal
space
could be
created
for urgent
spending
needs,
beyond
what can
be
achieved
through a
better
allocation
of
existing
resources.
A key
finding
concerns
the
importance
of
well-designed
fiscal and
monetary
policies
in
managing
higher
inflows of
foreign
aid. As
regards to
monetary
policy,
the study
found
support
for
targeting
single-digit
inflation
rates,
and, if
monetary
targets
are used,
for them
to allow
for
financial
deepening.
Protecting
against
exogenous
shocks
The
IMF's
Executive
Board has
agreed in
principle
to the
creation
of a new
financing
window
within the
PRGF Trust
for
low-income
members
hit by
exogenous
shocks.
This
window
will
provide
financial
support at
PRGF terms
to
low-income
members
without a
PRGF
arrangement.
It will
also serve
as a
potential
safety net
for
countries
that wish
to exit
from
continuous
PRGF
program
engagement.
This
window
complements
existing
facilities
available
to assist
LICs
facing
shocks,
such as
augmentations
of PRGF
access;
the
Compensatory
Financing
Facility;
subsidized
emergency
assistance
for
natural
disasters
and post
conflict
cases; the
use of
credit
tranche
resources;
and the
Trade
Integration
Mechanism
for
balance of
payments
shortfalls
arising
from
multilateral
trade
liberalization.
Policy
support
and
signaling
The
Policy
Support
Instrument
(PSI),
which was
established
in October
and which
will soon
be
operational,
is aimed
at
providing
signaling
of IMF
support
for policy
programs
without
financing
in LICs.
The PSI
will be an
important
addition
to the
range of
facilities
from which
LICs can
choose
their
desired
form of
engagement
with the
IMF.
The
facility
would be
available
to
PRGF-eligible
members
that
desire IMF
endorsement
of their
policies,
but that
do not
want or
need the
IMF's
financial
assistance.
These
would also
be
countries
that have
appropriate
and
effective
poverty
reduction
strategies
and policy
frameworks
in place.
In
addition
to
supporting
countries
in their
design of
policies,
the PSI
would
provide a
"signal"
about the
quality of
those
policies
to donors,
the
business
community,
and
others.
PRGF
financing
needs
To
ensure the
capacity
of the
PRGF to
meet
future
needs,
work is
underway
to
estimate
medium-term
demand for
PRGF
financing.
This will
take into
account
the
implications
of debt
relief,
and the
introduction
of the PSI
and the
shocks
window, as
well as
options
for
increasing
PRGF
lending
capacity.
The IMF's
Executive
Board has
emphasized
the close
linkages
between
the
financing
of the
Fund's
concessional
lending
operations
and
further
debt
relief,
and has
agreed
that the
institution
needs to
be
adequately
equipped
to meet
future
financing
demands
associated
with its
role in
supporting
LICs.
Back to
Table of
Contents
Governors
discuss
debt
relief,
global
imbalances,
and
low-income
country
issues
Endorsement
of the
multibillion-dollar
debt
cancellation
plan for
the most
heavily
indebted
poor
countries
was one
result of
the
September
24-25
IMF-World
Bank
Annual
Meetings.
The
meetings
also
addressed
several
other
crucial
international
issues.
The
finance
ministers
and
central
bank
governors
present
warned
that
widening
global
payments
imbalances,
and high
and
volatile
oil prices
posed
increased
threats to
the
ongoing
global
expansion.
They also
welcomed
proposed
new tools
for IMF
involvement
in
low-income
countries
(LICs),
and
endorsed a
medium-term
strategy
for the
Fund
proposed
by
Managing
Director
Rodrigo de
Rato.
The
IMF's
latest
World
Economic
Outlook,
projects
global
growth of
4.3
percent
for 2005
and 2006,
which is
close to
the
long-term
trend
rate, but
policymakers
urged
decisive
steps to
avoid
disorderly
adjustments
in the
global
economy.
"Global
imbalances
pose
serious
risks to
prosperity,"
de Rato
told the
Fund's
Board of
Governors.
The
International
Monetary
and
Financial
Committee
(IMFC),
the IMF's
ministerial
policy
steering
committee,
called
on oil
producers,
consumers,
and
companies
to
cooperate
to
stabilize
the oil
market. To
tackle
global
imbalances,
the IMFC
urged the
U.S. to
increase
national
savings
through
fiscal
consolidation;
emerging
Asia to
allow
greater
exchange
rate
flexibility;
and the
euro area
and Japan
to
implement
further
reforms to
enhance
growth.
The
IMFC
stressed
that a
successful
outcome to
the Doha
Round of
trade
liberalization
is
essential
for global
growth and
poverty
reduction,
and urged
action to
increase
market
access,
especially
for
developing
countries;
reduce
trade-distorting
domestic
support;
eliminate
all forms
of export
subsidies
in
agriculture;
and make
progress
on
financial
services
and
intellectual
property
rights.
Along
with the
agreement
on debt
relief,
the
Governors
agreed
that the
IMF plays
a critical
role in
supporting
low-income
countries
through
policy
advice,
assistance
with
capacity
building,
and
financial
assistance,
and
confirmed
that the
Poverty
Reduction
and Growth
Facility
(PRGF)—the
IMF's
concessional
loan
facility—will
remain the
main
instrument
for IMF
financial
support
for these
countries.
In
addition,
the IMFC
approved
two new
instruments
to
strengthen
Fund
support
for LICs.
The Policy
Support
Instrument
(PSI) will
be
available
to members
that do
not want
or need
IMF
financial
assistance,
but seek
Fund
assessment
and
endorsement
of their
policies.
And a new
window in
the PRGF
Trust will
be
available
to provide
timely
financial
support to
PRGF
countries
facing
exogenous
shocks.
The
IMFC also
welcomed
the
Managing
Director's
report on
the IMF's
medium-term
strategy,
agreeing
that the
Fund needs
to deepen
its
analysis
of
globalization.
The
strategy
provides a
framework
for
prioritizing
and
focusing
the Fund's
work and
increasing
its
effectiveness
and
preparedness
as it
faces the
future. It
proposes
specific
actions to
strengthen
its policy
advice to
member
countries,
improve
technical
assistance,
and reform
the Fund's
organization,
structure,
and work
procedures.
Back to
Table of
Contents
Interactions
between
representatives
of civil
society
organizations
(CSOs) and
IMF staff
at the
2005
Annual
Meetings
were
shaped by
the G-8
debt
relief
proposal.
The
proposal
and the
latest
HIPC
initiative
report
were the
topic of a
well-attended
session as
part of
the civil
society
dialogues
organized
by the
IMF, World
Bank and
CSOs prior
to the
Annual
Meetings.
The full
list of
dialogues
as well as
minutes of
most
sessions
will be
available
at
http://www.worldbank.org/civilsociety.
The
dialogues
climaxed
at a
Townhall
meeting
with World
Bank
President
Paul
Wolfowitz,
IMF
Managing
Director
Rodrigo de
Rato, and
the
outgoing
Chairman
of the
World
Bank's
Development
committee,
South
African
Finance
Minister
Trevor
Manuel.
Back to
Table of
Contents
De
Rato tells
CSOs of
efforts on
PRS,
shocks
window,
voice and
representation
At the
September
22
Townhall
meeting
with
CSOs, de
Rato said
the IMF is
striving
to be more
effective
and better
equipped
in its
work for
low-income
countries
(LICs) and
is also
aiming to
be more
responsive
to new
circumstances
in a
changing
world. The
Managing
Director
outlined
developments
in
policies
regarding
LICs and
the issue
of voice
and
representation
in the
Fund.
De Rato
said the
Fund has
spent an
intensive
year
working on
subjects
of
interest
to CSOs.
In tandem
with the
World
Bank, the
IMF has
refined
its
approach
to
countries'
Poverty
Reduction
Strategies
(PRS) to
help
ensure
that these
strategies
are home
grown by
member
governments,
and that
expected
results
are
measurable.
The Fund
is also
committed
to
incorporating
into its
analyses
the
capacity
of
programs
to help
countries
achieve
the
Millennium
Development
Goals
(MDGs). De
Rato also
described
the work
on
new
instruments
designed
to assist
LICs. He
also
highlighted
his
recommendation
that the
IMF needs
to
strengthen
the voice
of
emerging-market
economies
and
African
members in
the Fund.
Wolfowitz
told the
CSO
representatives
there are
four
reasons
CSOs were
important
to the
Bretton
Woods
institutions:
first,
they do
things
that
governments
either
cannot do
or do not
do very
well.
Second,
CSOs in
developing
countries
are an
important
way of
giving
voice to
the people
and of
giving
people a
chance to
hold their
governments
accountable,
or their
societies
accountable.
Third,
CSOs in
developed
countries
and
increasingly
in
developing
countries
can tell
international
institutions
what the
effects of
programs
are and
where they
are making
mistakes.
Fourth,
CSOs have
an
advocacy
role where
they
support
institutions
in efforts
to get
governments
to live up
to their
commitments
and
promises.
Manuel
reminded
the
meeting
that 2005
was the
year the
world was
going to
make
poverty
history.
With only
101 days
left, a
crisis of
inaction
loomed.
The key
challenge
is whether
this year
will be
seen in
retrospect
as a year
of wasted
opportunity
instead of
the year
of
development.
Manuel
said the
UN
Millennium
Summit
had, in
many
respects,
failed to
live up to
the
expectations
of the
developing
world. But
participants
need to
remain
committed
together
because
"the
challenge
of making
poverty
history is
one that I
don't
think we
should
allow to
slip from
our
hands,"
Manuel
said.
Questions
and
comments
from CSOs
covered
issues
such as
Iraq (also
see
article
on
Jubilee
Iraq
meeting),
user fees
for
primary
health
care, and
debt
relief. A
full
transcript
is
available
at
http://www.imf.org.
Back to
Table of
Contents
Other
meetings
On
September
21, a
panel
discussion
on
Accountability
Within the
Poverty
Reduction
Strategies
Approach
examined
World
Vision
UK's
report on
"Poverty
Reduction
Strategies:
Are They
Working?"
and
the World
Bank/IMF
2005 PRS
Review.
Panelists
were
Fletcher
Tembo of
World
Vision UK;
Warren
Nyamugasira
of the
Uganda
National
NGO Forum;
Linda van
Gelder and
Luca
Barbone of
the World
Bank's
Poverty
Reduction
Group and
Elliott
Harris of
the IMF
Policy
Development
and Review
Department
(PDR).
Tembo and
Nyamugasira
addressed
whether
the
poverty
reduction
strategies
can really
engage the
poor and
how to
further
involve
civil
society in
the
process.
Harris and
van Gelder
provided
general
recommendations
for
opening up
greater
policy
dialogue
space.
On
September
22,
"Bottom
Line"
Perspective
on the
Doha
Development
Agenda:
"Aid for
trade,"
Enhancing
National
Revenues
and Debt
Sustainability,
addressed
the key
elements
of the
Doha
Agenda and
how they
influence
the
mobilization
of
resources
for
poverty
reduction.
The
session,
moderated
by Liane
Schalatek
of the
Heinrich
Boell
Foundation,
focused on
the need
for
additional
aid to
support
trade
reforms
adopted by
developing
nations to
strengthen
trade
competitiveness.
Panelists
included
Nancy
Alexander
of the
Citizens'
Network
for
Essential
Services;
Uri Dadush
of the
World
Bank's
Development
Prospects
Group;
Hans Peter
Lankes of
PDR; and
Sony
Kapoor,
Senior
Economic
Adviser at
Jubilee
Research.
Dadush and
Lankes
emphasized
that two
World Bank
and IMF
channels
for trade
liberalization
assistance—the
Integrated
Framework
for
Trade-Related
Technical
Assistance
and the
Multilateral
Fund to
Support
Trade—have
enabled
countries
to pursue
prudent
policies
that have
in part
caused an
income
increase
of 6
percent in
developing
nations
since
2004.
Alexander
and Kapoor
were
skeptical
of the
positive
impact of
policies
that
encourage
developing
nations to
open
markets.
On
September
22, PDR's
Mark Plant
led a
session to
discuss
the recent
work and
papers on
The
Role of
the Fund
in
Low-Income
Countries.
IMF staff
explained
recent
initiatives,
including
the new
window in
the PRGF
Trust to
help LICs
facing
exogenous
shocks;
the new
Policy
Support
Instrument;
and
reviews of
the IMF's
role in
the
poverty-reduction
process
and the
design of
PRGF-supported
programs.
Other IMF
panelists
included
Patricia
Alonso-Gamo,
Mumtaz
Hussain,
Abebe
Selassie,
and Simon
Johnson
(see
article
for an
overview
of these
initiatives).
On
September
22, Luca
Barbone of
the World
Bank and
Robert
Gillingham,
of the
Poverty
and Social
Impact
Analysis
(PSIA)
Group in
the IMF's
Fiscal
Affairs
Department
participated
in the
launch of
the recent
Eurodad
PSIA
Advocacy
Report.
The panel
discussed
the
results of
a
six-month
study of
how the
World Bank
and
development
partners
are
carrying
out PSIA
work, with
reference
to case
studies
from
Ghana,
Mali,
Vietnam
and
Nicaragua.
The
session
was held
at the
offices of
InterAction,
a
consortium
of
U.S.-based
NGOs.
On
September
24,
Jean-François
Perrault
and
Michael
Koch, of
the World
Bank's
Resource
Mobilization
Department,
and
Martine
Guerguil
and Mark
Plant of
PDR
participated
in
The
HIPC
Initiative
and the
G-8 Debt
Proposal,
to discuss
the
recently
published
report, "Heavily
Indebted
Poor
Countries
(HIPC)
Initiative–Status
of
Implementation"
and to
update
developments
related to
the debt
proposal.
The panel
focused
first on
the HIPC
progress
report,
including
the degree
of
participation
by
commercial
and
non-Paris
Club
creditors,
and the
potential
inclusion
of new
eligible
countries.
Plant then
summarized
the issues
under
discussion
at the IMF
on the
debt
relief
proposal.
Back to
Table of
Contents
Legislators
debate
debt,
trade, and
other
issues
In a
year
marked by
promises
of debt
cancellation,
more open
trade, and
more
effective
aid, what
role can
parliamentarians
play to
ensure
that
commitments
are
honored so
that
countries
make
progress
toward the
Millennium
Development
Goals
(MDGs)?
How can
legislators
bring the
concerns
of their
domestic
constituents
to bear in
the global
decision-making
process?
These were
some of
the
challenges
discussed
by
parliamentarians
at the
sixth
annual
conference
of the
Parliamentary
Network on
the World
Bank
(PNoWB),
held in
Helsinki
on October
21-23. The
conference
that
brought
together
about 200
members of
parliament
(MPs) from
90
countries.
The
gathering
produced a
lively
debate
among the
legislators,
and with
representatives
of civil
society
organizations,
think
tanks,
multilateral
agencies,
as well as
WTO
Director
General
Pascal
Lamy, and
World Bank
President
Paul
Wolfowitz.
Representing
the IMF
were
Thomas
Dawson,
Director
of the
External
Relations
Department,
Mark
Plant,
Senior
Advisor in
the Policy
Development
and Review
Department,
and
Parliamentary
Liaison
Sabina
Bhatia.
Dawson
presented
the IMF's
Medium-Term
Strategy,
and Plant
spoke on
actions
needed
beyond
2005 to
move
countries
toward
achieving
the MDGs.
President
Yudhoyono
of
Indonesia,
addressing
participants
via video
link as
the
keynote
speaker,
said the
Millennium
Development
Goals are
"our best
hope for
humanity.".
The MDGs
are not
the
brainchild
of one
country or
group of
countries
and are
not being
imposed by
any
country or
group, he
said.
Rather,
all
countries
have equal
ownership
of the
goals. The
goals have
universal
relevance
and the
message to
all
countries
is that
"you are
not alone,
but are
part of a
global
movement,"
Yudhoyono
said.
The G-8
debt
cancellation
plan was
uniformly
welcomed,
but the
discussion
revealed
some
uneasiness.
Expressing
the view
of many
poor
countries,
Charles
Mutasa of
the
African
Forum and
Network on
Debt and
Development
(AFRODAD)
argued
that the
problem
with the
original
Heavily
Indebted
Poor
Countries
initiative,
and now
with debt
cancellation,
is that
several
countries
with heavy
debt
burdens
are not
included
and
therefore
are unable
to
benefit.
Expressing
the view
of the
World
Bank,
Vikram
Nehru,
Director
of the
Debt
Department,
said that
depending
on how
many
countries
are
finally
included,
the cost
to the
World
Bank's
International
Development
Association
could be
substantial
and could
jeopardize
future
lending.
Several
speakers
expressed
the hope
that no
additional
conditionality
would be
attached
to debt
cancellation.
Alison
Johnson of
Debt
Relief
International
called on
parliamentarians
from
borrowing
countries
to
scrutinize
carefully
government
spending
to ensure
that debt
relief
actually
helps
countries
progress
toward the
MDGs.
Looking
ahead, she
said
legislators
should
monitor
future
borrowing
to avoid
the
re-accumulation
of
unsustainable
debts.
Mutasa
suggested
setting up
a debt
management
office
supervised
by the
parliament.
More
generally,
discussion
of
macroeconomic
issues
between
legislators
and the
government
would be
desirable,
said the
IMF's Mark
Plant,
speaking
at a later
session.
Another
central
topic at
the
conference
was trade
and the
upcoming
WTO
ministerial
meetings
in Hong
Kong.
"When two
elephants
fight, the
grass ends
up
suffering,"
observed
Mutahi
Kagwe, MP
from
Kenya,
describing
worries
about the
current
state of
negotiations
between
the U.S.
and the EU
over
trade-distorting
agricultural
subsidies.
WTO
Director
General
Pascal
Lamy,
speaking
via video
link,
observed
that the
U.S. and
EU were
too far
apart for
negotiations
to
progress.
He warned
that if
the Hong
Kong
meetings
in
December
collapse,
it will
derail the
chances of
completing
the Doha
Development
Round by
end-2006.
Speaking
at a
different
session,
World Bank
President
Paul
Wolfowitz
said that
while it
may be
difficult
for
political
leaders in
the
industrialized
nations to
give up
subsidies
and other
barriers
to free
trade,
this
"temporary
discomfort
is nothing
compared
with the
daily
discomfort
and
deprivation
faced by
the
world's
poorest
people."
Bert
Koenders,
MP from
the
Netherlands
and chair
of PNoWB
said that
while
legislators
from
different
countries
may have
divergent
views on
specific
trade
issues, it
is
important
that they
actively
debate
these
issues
among
themselves.
At home,
parliamentarians
should
scrutinize
carefully
trade
agreements
and
question
their
governments
in
parliament,
he said.
The
problem,
however,
as several
speakers
noted, is
lack of
capacity.
Legislators
do not
have the
resources
or access
to
information
to monitor
and
scrutinize
the
actions of
their
governments.
Frannie
Leautier
of the
World Bank
Institute
described
the
Institute's
extensive
parliamentary
training
program,
and Peter
Koeppinger
of the
German
foundation
Konrad
Adenauer
Stiftung
noted that
his
organization
provides
extensive
capacity
building
not only
to
parliamentarians
but also
to
legislative
staff and
political
parties.
Beatrice
Kiraso, MP
from
Uganda,
said that
while such
training
programs
are
useful,
peer
training—legislators
sharing
experience
and
knowledge
with one
another—is
even more
valuable.
Back to
Table of
Contents
Managing
Director
de Rato
meets with
Jubilee
Iraq
At the
Annual
Meetings
Townhall
with
civil
society
organizations
(see
article),
Jubilee
Iraq
representative
Maysa
Ibrahim
raised
questions
related to
conditions
that might
be
attached
to a
future IMF
arrangement
with
Iraq—especially
the
question
of fuel
subsidies.
After
responding
during the
gathering,
IMF
Managing
Director
Rodrigo de
Rato
invited
Ibrahim to
discuss
the issue
with him
at a
follow-up
meeting.
At the
September
26 meeting
with de
Rato and
Iraq
mission
chief Adam
Bennett,
Ibrahim
asked
about the
possible
removal of
Iraq's oil
subsidies
and how
such a
step could
be
reconciled
with the
democratic
process.
De Rato
acknowledged
that
conditions
in Iraq
are
extremely
difficult.
However,
he said
that the
IMF's
financial
help since
September
2004
(under the
Emergency
Post
Conflict
Assistance
facility)
has helped
the
economy.
The IMF
will start
working on
a stand-by
arrangement
with Iraq,
and even
though the
details
have not
been
worked out
yet, he
said that
there are
three
priorities.
The first
is that
the Iraqi
authorities
will need
to
continue
improving
the
economic
data they
provide to
the IMF.
The second
is an
audit of
the
Central
Bank. The
third is a
shift from
a policy
of broad
subsidies
to a
policy
focusing
government
support on
the needy.
Iraq
spends the
equivalent
of 25
percent of
GDP on oil
subsidies,
or about
US$8
billion a
year. The
major
beneficiaries
of these
subsidies
are people
who take
the oil
from Iraq,
where
gasoline
sells for
2 cents a
liter, and
sell it in
Jordan for
50 cents.
The
current
subsidies
are not
targeted
at the
poor, but
benefit
those who
are better
off,
including
speculators.
De Rato
said that
the IMF is
not asking
the Iraqi
Government
to
immediately
eliminate
the
subsidies,
but to
have a
plan to
reduce
them and
use those
resources
for social
policy.
Ibrahim
argued
that oil
subsidies
were the
only means
of
distributing
wealth in
Iraq. De
Rato said
that he
was
generally
very happy
to hear
criticism
on the
issue of
wealth
distribution
and
encouraged
Jubilee
Iraq to
call on
the Iraqi
government
to devote
resources
from the
subsidies
to social
programs.
Ibrahim
said that
until now
Jubilee
Iraq has
seen no
viable
alternative
to the
subsidies.
The group
makes the
case to
communicate
to Iraqis
what needs
to be done
in the
country
and to try
to bring
the
disenfranchised
into this
process.
This
buy-in is
crucial,
Ibrahim
said, as
the
current
government
is only
transitional.
If this
government
pushes
reforms
through
without
buy-in,
she added,
the IMF
might be
seen as a
vehicle of
economic
occupation.
The
Managing
Director
emphasized
that the
IMF is not
asking to
change the
subsidy
system
because of
budgetary
pressures,
but to use
it for
social
purposes
and in a
more
direct and
targeted
way.
Back to
Table of
Contents
Bassirou
Sarr,
Center
Coordinator
for the
IMF East
Africa
Regional
Technical
Assistance
Center
(AFRITAC),
participated
in the
14th
Congress
of the
African
Regional
Organization
of the
International
Confederation
of the
Free Trade
Union
(ICFTU-AFRO)
held in
Tunis,
Tunisia on
September
28-30,
2005. The
conference
was
attended
by about
200 labor
leaders
from 46
African
countries,
representatives
from Asia,
Europe and
North
America,
and
representatives
from
regional
and
international
organizations
and civil
society
organizations.
The main
objective
of the
congress
was to
review the
activities
of the
ICFTU-AFRO
and
articulate
a
medium-term
vision for
the
African
Trade
Union
movement.
The
central
theme was
Africa's
development
challenges
and what
unions can
do to
address
them. A
vision
paper
entitled,
"Organizing,
Development
and Social
Justice:
Challenges
for the
African
trade
Union
Movement"
was
discussed.
The
congress
was
preceded
by a
two-day
forum at
which Sarr
was
invited to
make a
presentation
on one of
the
selected
themes
"Making
NEPAD Work
for
African
Workers."
The forum
was opened
by Andrew
Kailembo,
ICFTU-AFRO's
Secretary
General,
who
welcomed
the recent
efforts by
the New
Partnership
for
Africa's
Development
(NEPAD)
Secretariat
to involve
trade
unions in
the
dialogue
on
policies
and to
institutionalize
a
tripartite
consultative
forum
(NEPAD,
government
and labor)
as a
framework
for future
relations.
Sarr said
that by
subscribing
to NEPAD,
African
governments
have
emphasized
their
commitment
to
reforming
public
financial
management,
thereby
contributing
to better
governance,
faster
economic
growth,
and
poverty
reduction.
He
stressed
that
progress
in
governance
and
economic
and
financial
management
is
essential
to ensure
a stable
and
productive
environment
to attract
the
investment
necessary
for
economic
growth,
and job
creation,
and to
encourage
increased
donor
financing
through
budgetary
support.
While
long-term
goals have
been
formulated
in the
areas of
growth and
poverty
reduction,
insufficient
attention
has been
given to
formulating
goals in
public
finance
management.
He cited
the two
IMF
regional
technical
assistance
centers in
Africa as
an example
of the
IMF's work
to help
members
improve
governance
and public
financial
management.
These
centers
play a
very
specific
role in
providing
advisory
support
and
capacity
building
in three
specialized
areas of
competence:
financial
systems,
public
finances,
and
macroeconomic
statistics.
All three
areas are
essential
to
underpin
the
broader
reform
efforts in
governance
and
economic
and
financial
management.
The
forum was
a good
opportunity
for Sarr
to discuss
with union
representatives
the role
of the
Fund in
debt
relief and
its work
with
low-income
members.
Labor
participants
recognized
that a
priority
for the
union
movement
will be to
build the
necessary
capacity
to
formulate
alternative
policies
and take
maximum
advantage
of the
increased
opportunity
for
regular
dialogue
with
international
financial
institutions.
While they
agreed
that
substantial
progress
has been
made in
the
dialogue,
a lot more
needs to
be done to
enhance
trade
union
participation
in the
Poverty
Reduction
Strategy
Paper
(PRSP)
process,
as well as
influence
the policy
content of
the PRSPs.
Back to
Table of
Contents
Jurgen
Reitmaier,
Senior
Resident
Representative
in Kenya
On
October
18, I was
invited by
the Kenya
Alliance
of
Resident
Associations
(KARA) to
address
their
inaugural
luncheon
on the
subject of
"Civilian
Oversight
Over
Government
Expenditure
and
Government
Role in
Economic
Growth."
KARA was
founded in
1999 as an
umbrella
body for
some 180
resident
associations
from
across
Kenya.
KARA and
its member
associations
are
engaged in
advocacy
on
governance,
environment,
security,
water,
land, and
judicial
issues.
Publishing
a weekly
e-newsletter
since the
beginning
of this
year, KARA
has
emerged as
a serious
interlocutor
for
central
and local
government.
The
inaugural
luncheon
was
attended
by about
120
representatives
of KARA
member
associations
from
different
parts of
the
country as
well as
special
guests
from
government
and donor
organizations.
In my
address, I
stressed
the need
for civil
society
organizations
to build
their own
capacity
to enable
them to
articulate
realistic
positions
and engage
government
effectively.
Questions
from
participants
focused on
the
governance
challenges
of Kenya's
new
Constituencies
Development
Fund
(CDF),
which was
created in
2003 to
boost
development
spending
at the
constituency
level. I
agreed
that
problems
existed in
the
administration
of the
CDF, but I
also noted
that on
many
issues the
Government
of Kenya
sought the
views of
civil
society
and other
stakeholders,
if not
always
with
sufficient
time for
preparation
and
discussion.
Back to
Table of
Contents
During
the visit
of the IMF
mission to
Lusaka in
October
2005,
meetings
were
arranged
with
members of
civil
society
and trade
union
representatives.
Previous
missions
had held
similar
meetings
with these
organizations.
As debt
issues and
privatization
policy had
dominated
past
meetings,
the recent
attainment
of full
HIPC debt
relief and
the
prospect
of further
relief
from the
multilateral
debt
relief
initiative
seemed to
account
for a
relaxed
atmosphere
that
allowed
for
constructive
discussions.
Discussions
with the
unions
centered
on
proposed
labor law
reforms
and the
need for
reform in
public
sector
pension
schemes.
Trade
unionists
were
anxious to
see that
public
sector
pension
funds were
put back
on a
financially
sound
footing.
Civil
society
organizations
raised
issues
relating
to future
debt
management
and
contraction.
They
wanted
laws and
institutions
to be
strengthened
in order
to avoid
another
debt
overhang
in the
future.
While
criticizing
IMF
conditionality
in
general,
some
representatives
of civil
society
organizations
acknowledged
that Fund
conditionality
resulted
in the
strengthening
of laws
and
institutions
relating
to debt
management
and said
that this
seemed to
be a step
in the
right
direction.
Back to
Table of
Contents
If you
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website,
please
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notification
through
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notification
system.
- On
September
7,
Bethan
Emmett
of Oxfam
UK and
Hetty
Kovach
of
Eurodad
met with
Fiscal
Affairs
Department
(FAD)
staff,
Peter
Heller,
Marijn
Verhoen,
and
David
Coady,
and with
Andy
Berg of
the
Policy
Development
and
Review
Department
(PDR) to
discuss
the
macroeconomics
of
scaling
up
resources
to
provide
for
basic
health
services.
Kovach
also met
with
PDR's
Mark
Plant to
clarify
concerns
related
to the
IMF's
work in
low-income
countries
(LICs).
- Andy
Berg of
PDR and
Simonetta
Nardin
of EXR
attended
the 59th
Annual
Department
of
Information
(DPI)/
Non-governmental
Organization
Conference
in New
York on
September
9.
Moderated
by Pete
Henriot
of the
Jesuit
Centre
for
Theological
Reflection
in
Zambia,
Berg
participated
in a
panel on
The
UN, the
IMF and
Millennium
Development
Goals.
Other
speakers
included
Rathin
Roy, of
the
United
Nations
Development
Programme
(UNDP),
and
Vitalice
Meja,
Director
of the
African
Forum on
Debt and
Development.
- On
September
13,
EXR's
Simonetta
Nardin
participated
in a
panel
discussion
on
Economic
and
Military
Violence—IMF/World
Bank
Policies:
Two
Sides of
the Same
Coin
as part
of the
Open
UN
Conference:
One
Person,
One Vote
organized
bythe
Bridge
Initiative
International
in
collaboration
with
other
organizations.
The
conference
provided
an venue
for
representatives
of civil
society
organizations
who were
not able
to
attend
the UN
World
Summit
in
September
to
examine
issues
of
global
democracy,
global
governance
and the
efforts
by
multilateral
institutions
to
reduce
poverty.
-
Managing
Director
Rodrigo
de Rato
participated
in a
panel
session
on
Breaking
the
Impasse
On Trade
as part
of the
Clinton
Global
Initiative
conference
in New
York on
September
15-17.
De Rato
emphasized
the key
role of
trade
liberalization
in
driving
the
global
economy
and
highlighted
the
responsibilities
of both
developed
and
developing
countries.
In
response
to
criticism
of the
WTO, he
characterized
the
organization
as the
appropriate
venue
for a
rules-based
multilateral
approach
to trade
liberalization
and
reform.
The
conference
provided
a
setting
for
discussion
of broad
issues
and
policy
commitments
towards
poverty
eradication,
religious
and
conflict
reconciliation,
climate
change,
and
efforts
to
encourage
governance,
enterprise
and
investment.
- On
October
12,
Klaus
Enders
and Luc
Leruth
of the
IMF
Offices
in
Europe,
attended
a
dialogue
on
International
Trade
Policies:
Between
Globalization
Discourse
and
Development
Objectives,
organized
by the
Bridge
Initiative
International.
They
discussed
the
protection
of
weaker
trade
competitors
in light
of the
Doha
Round
Negotiations.
Other
panelists
represented
the
World
Bank, UN
Conference
on Trade
and
Development
(UNCTAD),
UN Food
and
Agriculture
Organization,
the
Organization
for
Economic
Co-operation
and
Development
(OECD),
civil
society
organizations
and
academia.
Most
participants
recognized
that a
multilateral
agreement
would be
the only
way to
eliminate
subsidies
in OECD
member
countries,
but many
CSO
representatives
were
concerned
that a
Doha
deal
would
reduce
the
policy
space in
developing
nations,
for
example
the
ability
to
explore
alternatives
for the
strengthening
of
competitiveness
in their
infant
industries.
- Mark
Plant of
PDR and
Linda
Van
Gelder
of the
World
Bank
participated
in a
symposium
held in
Geneva
on
October
17-21
organized
by the
International
Labor
Organization's
Bureau
for
Worker's
Activities,
along
with
trade
union
leaders
from 45
countries,
representatives
of the
World
Bank,
UNCTAD
and the
ILO.
Participants
discussed
the role
of
International
Financial
Institutions
(IFIs)
and the
challenge
to
eradicate
poverty.
Plant
and Van
Gelder
presented
the
results
of the
Poverty
Reduction
Strategies
(PRS)
Review
and
responded
to
questions
on
increased
participation
by trade
union
representatives,
macroeconomic
policy
and the
PRS
Papers,
country
ownership
of PRSs,
structural
adjustment
and
PRSs, as
well as
employment
and
PRSs.
- EXR
staffer
Simonetta
Nardin,
and John
Garrison
and Maya
Brahmam
of the
World
Bank's
External
Affairs
Department
gave
brief
presentations
on the
role of
the IMF
and the
World
Bank to
14
representatives
from the
NGO
Fourth
World
Movement,
on
October
19. The
visiting
delegation
was
interested
in the
relationship
of the
IMF and
the Bank
with
Civil
Society
representatives
to
promote
fiscal
and
technical
assistance
that is
country-driven
by
member
nations,
as
illustrated
by the
Poverty
Reduction
Strategy
Papers.
- On
November
3, Peter
Heller,
FAD
Deputy
Director,
presented
his
paper,
Pity
the
Finance
Minister:
Issues
in
Managing
a
Substantial
Scaling
Up in
Aid
Flows,
at a
Center
for
Global
Development
Seminar,
with
Steve
Radelet
as the
discussant.
Heller
said
that
scaling
up
substantial
aid
flows
will
require
development
partners
to
address
many
issues,
including
the
impact
of
higher
aid
flows on
the
competitiveness
of aid
recipients;
the
management
of
fiscal
and
monetary
policy;
the
delivery
of
public
services;
behavioral
incentives;
and the
change
in
economic
growth
rates.
Back to
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Contents
-
Managing
Director's
Statement
to the
Development
Committee.
-
Remarks
at the
High-Level
Plenary
Meeting
of the
UN
General
Assembly,
by
Rodrigo
de Rato,
Managing
Director,
New
York,
September
14,
2005.
-
Remarks
at
Institute
for
International
Economics
Conference
on IMF
Reform,
by
Rodrigo
de Rato,
Managing
Director,
September
23,
2005.
-
The Role
of the
IMF in
Safeguarding
Global
Financial
Stability,
remarks
by
Rodrigo
de Rato,
Managing
Director,
at the
Institut
International
d'Etudes
Bancaires
(IIEB),
Barcelona,
Spain,
October
21,
2005A
Back to
Table of
Contents
-
The
Managing
Director's
Report
on the
Fund's
Medium-Term
Strategy
-
Report
of the
Managing
Director
to the
International
Monetary
and
Financial
Committee
on the
IMF's
Policy
Agenda
-
Communiqué
of the
International
Monetary
and
Financial
Committee
of the
Board of
Governors
of the
International
Monetary
Fund
-
Development
Committee
Communiqué,
2005
Annual
Meetings
-
Policy
Support
and
Signaling
in
Low-Income
Countries,
by the
Policy
Development
and
Review
Department
in
consultation
with
other
Departments
-
Heavily
Indebted
Poor
Countries
(HIPC)
Initiative—Status
of
Implementation,
by the
Staffs
of the
IMF and
World
Bank
-
Review
of
PRGF-HIPC
Financing,
the
Adequacy
of the
Reserve
Account
of the
PRGF
Trust,
and
Subsidization
of
Emergency
Assistance,
by the
Finance
Department
in
consultation
with the
Legal
and
Policy
Development
and
Review
Departments
-
The
Macroeconomics
of
Managing
Increased
Aid
Inflows-Experiences
of
Low-Income
Countries
and
Policy
implications,
by the
Policy
Development
and
Review
Department
in
consultation
with the
Area,
Fiscal,
Monetary
and
Financial
Systems,
and
Research
Departments
-
Doha
Development
Agenda
and Aid
for
Trade,
by the
Staffs
of the
IMF and
World
Bank.
-
Can PRGF
Policy
Levers
Improve
Institutions
and Lead
to
Sustained
Growth?
By
the
Research
Department
in
consultation
with
other
departments
-
Implementation
of the
Policy
Support
Instrument,
by the
Policy
Development
and
Review
and
Legal
Departments
-
Review
of the
Fund's
Transparency
Policy,
by the
Policy
Development
and
Review
Department
-
Can Debt
Relief
Boost
Growth
in Poor
Countries?
By
Benedict
J.
Clements,
Rina
Bhattacharya,
and Toan
Quoc
Nguyen,
Economic
Issues
No. 34
-
On
Target?
The
International
Experience
with
Achieving
Inflation
Targets,
by Scott
Roger,
Mark R.
Stone,
Monetary
and
Fiscal
Systems
Department,
Working
Paper
No.
05/163
-
Finance
in Lower
Income
Countries:
An
Empirical
Exploration,
by
Enrica
Detragiache,
Poonam
Gupta,
Thierry
Tressel,
Research
Department,
Working
Paper
No.
05/167
-
Sustaining
Growth
Accelerations
and
Pro-Poor
Growth
in
Africa,
by
Catherine
A.
Pattillo,
Sanjeev
Gupta,
Kevin
Joseph
Carey,
African
Department,
Working
Paper
No.
05/195
-
Financial
De-Dollarization:
Is It
for
Real?
By
Alain
Ize,
Eduardo
Levy
Yeyati,
Monetary
and
Financial
Systems
Department,
Working
Paper
No.
05/18
-
Pity the
Finance
Minister:
Issues
in
Managing
a
Substantial
Scaling-Up
of Aid
Flows,
by Peter
S.
Heller,
Fiscal
Affairs
Department,
Working
Paper
No.
05/180
-
The
Macroeconomic
Challenges
of
Scaling
Up Aid
to
Africa,
by
Sanjeev
Gupta,
Robert
Powell,
Yongzheng
Yang,
African
Department,
Working
Paper
No.
05/179
Back to
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Contents