Governance, Public Participation and Environmental Issues and the IMF
By Scott Vaughan, Director, Policy Development, Unisfera
The paper examines governance-related reforms in the International Monetary Fund (IMF),
including reform of its internal governance structure approved in March 2008 to developing
countries representation in the Fund’s decision-making. Also in 2008, the Fund promised to
increase engagement with civil society organizations. In a separate initiative, the Fund in March
2008 included for the first time in the World Economic Outlook a stand-alone chapter examining
a global environmental issue – that of climate change.
To place these changes in their institutional context, the paper traces the long-standing debate
about IMF internal governance reforms, as well as its evolving engagement with civil society
organizations. Significant progress has been made in the institutional transparency. However, it
is unlikely that external transparency will result in deeper levels of civil society participation in
decision-making until internal governance reforms take effect in 5-10 years which will provide
additional representation among developing country members.
The paper then briefly examines the Fund’s stance on environmental issues since 1991 in three
areas: (a) environmental policies; (b) environmental programmes; and (c) economic research.
The most important of these is its economic research. The Fund endorses key assumptions of
environmental economics that link environmental degradation with pricing failures, and
recommends fiscal policy responses comprised of pollution charges, green incentives,
eliminating environmentally-harmful subsidies, and other measures. However, Fund research
remains ambiguous about the extent of environmental externalities themselves.