Special spring meetings edition A CO-PRODUCTION OF THE BRETTON WOODS PROJECT WITH AFRODAD, BANK INFORMATION CENTER, CHOIKE AND EURODAD have so far accompanied IMF G20 ‘trillion’ dollar magic trick: bailout packages (see page 4). Duncan Green of Oxfam said: “We have deep concerns about how cen- Reforms remain house of cards tral the IMF has become in this cri- sis. The Fund has been given a blank cheque but its reform remains no more than a promise.” To great fanfare, the G20 announced a $1.1 trillion global package, which may deliver less Financial reform: any teeth? W W W.BRET TONWOODSPROJECT.ORG than half that amount in new resources. Issues of fundamental economic reform were left The G20 decided to endorse the off the agenda, despite clear proposals from NGOs and the UN. OECD approach of exchanging information about companies and The G20 ‘London Summit’ on 2 individuals suspected of evading ROBIN HEIGHWAY-BURY / THOROGOOD April captured positive media atten- taxes on request, rather than the tion despite failing to set out a vision more stringent automatic exchange for transformative economic change, of information called for by the Tax and pumping more money into the Justice Network and others. The fan- IMF and World Bank without a clear fare surrounding a supposed OECD plan for reforming them. ‘blacklist’ of non-cooperative coun- The IMF received most of the tries went silent when it emerged boost (see page 7), with a possible that only four countries were on the $500 billion in new resources and list - Uruguay, the Philippines, $250 billion in issuances of special Labuan in Malaysia, and Costa Rica drawing rights (SDRs). Of the $500 - none of them well known tax billion, only half has been signed havens. All four were subsequently and sealed, the vast majority of removed. which had been previously The Financial Stability Forum 65 announced. An allocation of SDRs, will be expanded to include all G20 the IMF’s own internally created countries, and renamed the reserve asset, effectively means Financial Stability Board. It will have printing new money. Of the total, a purely advisory role to “promote MARCH / APRIL 2009 only $85 billion will go to middle- co-ordination”, “assess vulnerabili- and low-income countries. Unlike ties affecting the financial system” other forms of finance, SDRs come and “set guidelines”. With no spe- without conditions attached, but a cific powers or sanctions available country must still pay interest when to it, and a lack of a clear governance it uses them. structure, it remains to be seen On new money for the World whether this new board will be an Bank, the G20 is particularly hazy, improvement. agreeing only to “support” addition- On banking regulation, surpris- al annual lending by the multilater- ingly little concrete was agreed. al development banks (MDBs) of Post-summit, British prime minister $100 billion per year. Some of this, Gordon Brown repeated his asser- such as a boost to IFC trade financ- tion that the ‘shadow banking sys- ing, is money already promised. tem’ would be brought into “the Some is supposed to come from aid budget for this purpose. entirely absent from the commu- global regulatory net”, but the lan- existing MDB resources. Some will niqué. Controversially, it is likely guage of the communiqué is far come from a 200 per cent boost to Money for the poorest? that most of this total will go more cautious. “Systematically the Asian Development Bank’s cap- Of the putative $1.1 trillion, $50 bil- through heavily criticised export important financial institutions, ital, and consideration of similar lion, or less than 5 per cent, is likely credit agencies. The communiqué’s markets, and instruments” should moves for the Inter-American to be for the 49 poorest countries in commitment to meet existing aid be subject to an “appropriate degree Development Bank and the African the world. The communiqué does pledges obviously meant more to of regulation and oversight.” Hedge Development Bank. not give clear details of how this fig- some G20 countries than others. fund and credit rating agency “reg- World Bank attempts to garner ure is arrived at, but it includes Italy, the current host of the G8, istration” is promised, and credit additional contributions for their SDRs. Most of the total is IMF loans, plans to cut its aid by 55 per cent derivatives markets will be “stan- ‘vulnerability’ funds (see page 6) which are only available if poor this year. dardised,” but it is left to the indus- were snubbed, with the G20 making countries’ economies go into melt- The G20 communiqué says noth- try itself to decide how. clear that these would only be deliv- down. ing new on IFI governance reform Missing the green picture ered bilaterally from willing donors. The detail on the promised (see page 9). Big increases in IMF So far, the UK is the only country to “global effort to ensure the availabil- resources were not matched with Green groups slammed the G20 for make concrete new commitments - ity of at least $250 billion of trade clear commitments to end the con- failing to signal a clear commitment diverting £200 million of its existing finance over the next two years” is troversial austerity policies that continued on page 5 Ghana’s offshore nightmare IMF: bigger but not much nicer US blocks World Bank’s IFC mining conflict of interest climate investment fund in Yemen ––comment, page 3 ––page 7 ––page 8 ––page 10 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 reach the economic tipping point in Wo r ld B a n k s ti ll su p po r ti n g c a r bo n - favor of low-carbon development, the report states it will “require in t e n si v e f u t u r e innovative public policy and strong political leadership.” By Heike Mainhardt-Gibbs, Bank Information Center Roadmap for the future The World Bank Group will kick off the revision of its energy sector strategy this autumn but So far the Bank has not shown strong leadership, as evidenced by new research shows its fossil fuel lending is on the rise. its increased financing for fossil fuels. The Bank needs to reassess The energy sector worldwide is reached an “in-principle agree- difficult. Each fiscal year the Bank and responsibly revise its approach responsible for the lion’s share of ment” to supply $5 billion over five supports a coal, oil, or gas project to energy sector financing, including greenhouse gas emissions and the years to expand Eskom, the South represents a commitment to car- by: calculating and disclosing proj- Bank’s energy investments are no African state-owned power giant bon-intensive energy sources for 20 ect greenhouse gas emissions; exception. US based NGO Bank (see Update 64). In addition to the to 50 years. Moreover, many of the including carbon valuation in proj- Information Center (BIC) recently IFC’s billions, the African Bank’s largest oil and gas extraction ect cost-benefit analyses; hiring published World Bank energy sector Development Bank has approved and pipeline projects have been and more staff (especially within the lending: encouraging the world’s $500 million, its largest private sec- continue to be aimed at exports to IFC) with renewable energy expert- addiction to fossil fuels. The assess- tor project to date. Although details rich countries, feeding their ise; promoting innovative low-car- ment finds that gains in renewable of IFC funds are still under discus- appetite for fossil fuels. Thus, the bon policies on tax incentives, trans- energy and energy efficiency in sion, it is likely that a significant Bank is not adequately encouraging mission, investment, feed-in tariffs, recent years still do not compensate amount will go to coal projects. countries to reduce greenhouse gas and land-use policies; and provid- for highly imbalanced financing in Eskom supplies 95 per cent of emissions from fossil fuels. ing leadership by convincing mem- favour of fossil fuels. South Africa’s electricity, 90 per ber countries that it can be in their cent of which is generated by coal. Alternatives? best interest to invest in no-carbon The BIC study shows that Bank fossil fuel lending is on the rise, According to Reuters, Eskom has In contrast to the Bank’s reasoning, energy resources. especially for coal. During its 2008 launched a $33 billion new power it is not a forgone conclusion that Climate change is anticipated to fiscal year, the World Bank Group investment programme, with two developing countries will need to negatively affect developing coun- increased funding for fossil fuels by 4,800 megawatt coal-fired power continue building more coal power tries and the poor of the world dis- 102 per cent compared with only 11 plants to come on stream in 2015 plants and other fossil fuel energy proportionately - the very countries per cent for new renewable energy and 2016. sources. A recent Worldwatch and people Bank programmes aim (solar, wind, biomass, geothermal The Bank defends support for Institute report advocates a no-car- to benefit. As such, the Bank must and small hydropower). The Bank’s coal on the basis that the need for bon energy roadmap and demon- significantly change its development three-year average increase for electricity is so great in the develop- strates that developing countries are model and become a leader in help- renewable energy and energy effi- ing world that coal plants are going well positioned to leapfrog the car- ing create low-carbon economies. In ciency of 73 per cent is from a very to be built with or without Bank bon-intensive development path of the revision of the energy sector low baseline compared with fossil support. It contends that without the 20th century and go straight to strategy, it would serve the Bank fuel projects. Bank support cheaper, dirtier coal the advanced energy systems that well to remember that its role is not On average, fossil fuel financing plants will proliferate. are now possible. The report points to lead countries down the carbon- by the Bank is still twice as much as In fact, the Bank counts some out that renewable and efficiency intensive, economically unstable new renewable energy and energy coal-based activities as low-carbon technologies will allow developing path of the developed countries. efficiency projects combined and projects, such as making a coal- countries to increase their reliance World Bank energy sector lending five times as much as new renew- fired thermal plant more efficient on indigenous resources and reduce ◊ bicusa.org/admin/ ables taken alone. The private sec- relative to the “business-as-usual their dependence on expensive and Document.100733.aspx tor arm of the Bank Group, the scenario”. To term any upgraded unstable imported fuels. But, to International Finance Corporation coal-fired plant as ‘low-carbon’ (IFC), is lagging behind its counter- seems at best misleading given that parts on renewable energy efforts. even high efficiency coal plants Excluding hydroelectric projects, the IFC is currently only involved emit more than twice as much CO2 per megawatt-hour as combined World Bank’s ‘environment’ in ten renewable energy projects worldwide: two wind, two geother- cycle natural gas plants. There is no evidence that the Bank’s recent loan to Brazil: for what? mal, and six other. coal investment was either neces- During the last three years, the sary or resulted in more efficient By Patricia Bonilha, Rede Brasil Bank spent 19 per cent more on coal technology than would have been than on new renewable energy used otherwise. Once again the World Bank is lend- loan has been pushed forward with- sources. During the 2008 fiscal year, ing money to Brazil, but without out sufficient information being Contributing to climate change adequate transparency or participa- the Bank provided approximately made available and without prior $1 billion to coal-based projects The BIC study also found that Bank tion of civil society. consultation with Brazilian civil including the Tata Ultra Mega fossil fuel projects have a clear According to the Bank, the latest society. super critical coal plant in India, impact on global CO2 emissions. ‘programmatic environmental sus- On 5 March, one day before the two projects for privatisation of When the fossil fuels involved in tainability development policy loan loan was scheduled to be discussed coal-fired plants in the Philippines World Bank and IFC lending proj- project’ is aimed at “key sectors such by the Bank's board, Brazilian envi- (see Update 62), and the PT Makmur ects for the 2008 fiscal year are com- as forest management, water and ronmentalists, social movements Sejahtera Wisesa coal power plant busted, the project lifetime CO2 renewable energy... and will inte- and networks monitoring interna- in Indonesia. emissions from one-year of financ- grate Brazil's climate change agen- tional financial institutions sent a let- ing will equate to approximately da across sectors.” This is the largest ter to the Bank saying that this loan New carbon projects seven per cent of the world’s total loan ever granted to Brazil by the is a mistake and demanding a broad There is no end in sight for the annual CO2 emissions from the Bank: $1.3 billion in its initial phase, consultation with Brazilian civil Bank’s involvement in fossil fuels, energy sector, or more than twice to be increased in a following phase society. However, the board including coal. For example, the all of Africa’s annual energy sector to a total of $2 billion. Although the remained deaf to the Brazilians' IFC will be involved in developing emissions. loan is for the Brazilian treasury, request and approved the loan. Ghana’s recently discovered Jubilee Continued Bank fossil fuel lend- loan documents reveal that it will go Over the past decade, the Bank offshore oil field (see page 3). ing, especially coal and oil, will to the National Economic and Social approved a series of technical In addition, the IFC has recently make a low-carbon transition very Development Bank (BNDES). The continued on page 3 2 I BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 n June 2007 the ‘Jubilee’ gulf. Ghana should learn from oil-field off the cost of Ghana’s off-shore this example and require closer Ghana was discovered. scrutiny of the safety and envi- Kosmos Energy plans to invest nightmare ronmental impact of tankers and $850 million and Tullow Oil drilling techniques proposed for $1.2 billion in the overall project the project. COMMENT costs of $3.2 billion. In late Ghana's Environmental Pro- by Bishop Aklogo, ISODEC, Ghana February the IFC board decided tection Agency (EPA) had not and to provide $100 million for Kosmos and $115 million for Tullow. could not have issued any permit for oil and gas development or the The International Finance Corporation (IFC) ignored due process construction of oil and gas separation, processing, handling, and stor- requirements mandated by the laws of Ghana in the case of the Jubilee age facilities without the submission by the companies of an environ- oil field project and should not have considered the loan applications at mental and social impact assessment (ESIA) in accordance with regula- the board. In so doing, the IFC is encouraging the infringement of the tions. Everyone admits that the companies have not submitted a full basic rules of governance and transparency. Ghanaian NGOs have ESIA to the government. expressed several concerns regarding this project to the IFC, concerns The IFC, the previous government of Ghana and the companies have which have not been addressed properly. violated both substantive and procedural processes of the law by trying The fact that the revenues will be seven to nine per cent of Ghana’s to rush the project. The IFC and the companies appear to have taken government income requires it be defined by the IFC as a ‘significant undue advantage of the transition in government by treating a few con- project’, invoking specific social obligations. The project should there- versations with newly appointed ministers, who could not have been fore be fully transparent. fully appraised of the project or oil sector, as formal consent from the Projects for the extraction of petroleum and natural gas are usually government and people of Ghana. considered to pose the highest environmental risks, and are classified as The IFC acknowledges that the potential emergence of a large oil and ‘category A’ projects. However, the IFC has rated this project as a ‘cate- gas sector does pose new political, regulatory, and governance chal- gory B’, requiring fewer safeguard procedures. The Jubilee field could lenges for the country. The fundamental problem is that large-scale oil significantly and adversely affect the marine environment including production will start before proper governance structures are in place. endangered species, coastal communities and economic enterprises. Although the companies have to disclose their payments to the govern- The project clearly meets the requirements for category A. Yet, there has ment of Ghana under IFC regulations, it is also crucial that the public been no real substantive answer to this issue by the IFC. knows the terms of the contracts. A vague reference to parts of them The Gulf of Guinea’s striking features are its unique coastal wetlands already being in the public domain is not sufficient. and the upwelling of deep nutrient-rich ocean water to the surface, Finally, in 2004, the Gulf of Guinea was second only to the Straits of which supports one of the most diverse and economically important Malacca in number of piracy attacks. The oil emanating from the Niger fishing-zones in the world. Nonetheless, the IFC has argued for the use Delta has also led directly to the proliferation of weapons throughout of a single-hulled oil storage platform despite danger of spills from it the region along with alleged corruption in Nigerian politics. Yet no being frequently approached by other tankers for loading and unload- assessment of security risks has been undertaken in Ghana. ing. Furthermore, a US Forest Service assessment mission to Cameroon We feel that the IFC has not properly addressed the concerns of civil and Equatorial Guinea in 2006 found that even though these two coun- society or sufficiently taken into account the grave risks this project tries have seen increasing activities in the petroleum sector, neither had poses to the environment, economy and governance systems of Ghana, the capacity or institutional coordination to handle disasters like oil not to mention the possible contributions it and other fossil fuel projects spills that could be a threat to the rich marine life and ecosystems in the will make to climate change. continued from page 2 assistance loans to the Brazilian gov- for environmental sustainability’ biofuels production, which would internally, in terms of policies and ernment, including on improving were never done. This has com- require an additional 7.5 million actions relating to the causes and environmental sustainability, and for pounded problems with the hectares of sugar cane. effects of global warming. Another power and energy sector reform. In Brazilian government's energy poli- Beyond the lack of transparency, problem raised by the organisations addition, there have been substan- cy. Its ten year energy expansion particularly with respect to civil in the letter to the Bank, and tial policy reform loans, including plan (PDE 2008-2017) was put society, there is strong evidence that acknowledged by Bank staff, is that $454 million for the energy sector. In together behind closed doors in gov- the loan will be destined to guaran- it is not possible to monitor how the the words of the Bank, its role in ernment agencies, in consultation tee capital for financing large infra- money will be spent. Brazil, which is no longer financial- only with energy companies. structure projects through BNDES, After a four year grace period, ly dependent on its loans, is no The PDE gives priority to the which is strongly criticised by civil Brazil will repay this loan for the longer to “tell the Brazilian govern- construction of 71 large dams, with society. next 20 years. However, it is not ment what to do, but how to do it.” the involuntary expulsion of more Recent BNDES loans include the publicly known at which interest However, these loans have failed than 100,000 Brazilians and the Santo Antonio and Jirau dams on rate and under what conditions the to meet their supposed objectives. flooding of indigenous reserves and the Madeira River in the Brazilian loan will be repaid. What we do For example, there is still a lack of conservation areas. It promotes the Amazon, for which the Bank has know is that this marks another step effective integration of social and construction of polluting thermo- made commitments to lend more in the Bank’s resurgence, after years environmental considerations in electric power stations burning oil, than $6 billion. These projects pro- of a diminishing role in Latin Brazil's energy planning. The strate- coal, and gas, expected to increase mote the destruction of biological America. gic environmental assessments that greenhouse gas emissions by 172 per diversity and have significant socio- Brazilian civil society letter the government was to have carried cent by 2017 compared to 2008, cultural impacts, placing at risk the ◊ www.rbrasil.org.br/conteudo/carta- out as a condition of the $503 mil- equivalent to 39.3 million tons of commitments made by the Brazilian ao-banco-mundial-05-03-2009/ lion ‘first programmatic reform loan CO2, in addition to the expansion of government internationally and 3 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 IMF loan are heating up in Sri IMF emergency loans: Greater Lanka. In early March, the president Mahinda Rajapaksa said that “We will not pawn or sell our mother- flexibility to overcome the crisis? land to obtain any monetary aid.” However, according to the Sri By Nuria Molina, Eurodad Lankan newspaper the Sunday Times, opposition politicians and Despite promising IMF rhetoric about more flexibility in fiscal and monetary policies some economists fear that the IMF loan that the government now because of the crisis, new loans in Romania, Latvia, and Armenia show that practice is hopes to get will include stiff condi- not in line. The Fund is still pushing tight fiscal policy and single-digit inflation. tions. Practice what you preach In late March the IMF executive the loan documents have not yet ditions. However, the programme In words of the Thai prime minister, board agreed to phase out the use of been published, the information so still aims at a rather low inflation “When the G20 talks about reform one type of IMF structural condi- far disclosed by the IMF suggests rate, “converging gradually toward of international financial institu- tionality (see page 7). Sources from that all these programmes push pro- the medium-term goal of 5 per cent.” tions, it is not just a question of within the IMF recently stated that cyclical policies. The ESF for Ethiopia, although increasing capital, but also of how the instructions from senior man- According to the declarations slightly more flexible in its condi- that capital is used ... that means agement are clear: advice to mem- made by the IMF mission chief for tionality framework, still pushes for making sure there are new facilities ber states should clearly point at Romania to the Financial Times, the the “elimination of domestic fuel for fiscal stimulus, continued devel- swiftly increasing fiscal stimulus, country will receive about $17.5 bil- subsidies and for “significantly opment and social safety nets for higher public spending, and flexible lion from the IMF in exchange for tightening fiscal policy”. It also developing economies ... one of the monetary policy. bringing “its budget deficit below 3 includes removal of some taxes, lessons of the 1997 financial crisis in At an International Labour per cent of gross domestic product including on basic food items, as Asia was that the conditions Organisation meeting in Geneva at by 2011”. Moreover, he said, “there well as increased cash transfers in enforced by the IMF had caused the end of March, IMF head, will be specific reforms in the fiscal the safety net programmes. unnecessary pain.” Dominique Strauss-Kahn said, “I’m area to make sure the deficit stays In March, the IMF approved yet G20 leaders decided to increase especially concerned by the fact that low over time - restructuring wage another ESF agreement with the IMF resources up to $750 billion (see our forecast, already very dark ... policies, recalibrating the Democratic Republic of Congo, page 1). The main downside of the will be even darker if not enough fis- pension system to where the Fund will require agreement is that there is little men- cal stimulus is implemented.” Olivier Blanchard, IMF chief make it sustainable, improving the con- push “keeping monetary policy tight”. This will somehow tion of the need to reform IMF terms pro- of lending and advice. Southern civil economist, has been even bolder: “I trol and monitor- need to be reconciled society groups, such as TWN, fear would put it more starkly. What is ing of public enter- with one of the key objec- that “additional resources to the IMF needed is not only a fiscal stimulus now, but a commitment by govern- prises.” The Fund will also seek to cyclical tives of the programme: “redirecting spending to would give it the means by which to discipline crisis-hit countries the ments that they will follow whatev- ensure that bring- policies activities that would prop wrong way, worsening the crisis for er policies it takes to avoid a repeat ing down inflation up domestic demand.” them.” of a Great Depression scenario.” He is a core goal of the A substantial change from At the spring meetings, the exec- added: “monetary and fiscal policies country’s monetary policy. previous loan agreements is that utive board is expected to discuss need to become even more support- Guatemala will also have to fol- the IMF consistently suggests sus- and agree higher access for low- ive of aggregate demand.” low stringent monetary policies in taining expenditure in the social sec- income countries. Over the summer, exchange for their $950 million IMF tor, including on safety nets to pro- the board will discuss the terms of Rhetoric versus reality loan, with requirements that “mon- tect the most vulnerable. lending of IMF facilities, including Preliminary research by the Third etary policy [be] focused on anchor- Unfortunately, possible changes the issue of conditionality. Southern World Network (TWN) on the ing inflation at low levels combined towards greater flexibility in some governments, civil society and other Fund’s advice to countries that seek with a flexible exchange rate sys- of the programmes are so minimal actors are likely to put pressure on assistance to cope with the effects of tem.” In Mongolia, the programme that it is hard to tell whether this is the board to ensure that recipient the crisis is not promising. envisages tightening fiscal policy to change in policy by the IMF. countries get the necessary fiscal According to TWN “the documen- “restore the deficit to a sustainable In the meantime, the IMF report- and policy space to decide the best tation on the IMF’s current loan con- range”. ed that the first review of the measures to overcome the crisis, and ditionalities and policy advice Although Armenia will also need Latvian loan, originally approved in are not be constrained by stringent demonstrate that the traditionally to cut expenditures to meet the tar- December, has not been completed. IMF policy advice and conditions. contractionary nature of the IMF’s get of 1 per cent deficit in 2009, the According to the Financial Times, the Now that the IMF has recognized fiscal and monetary policy frame- newly approved Poverty Reduction Fund “has suspended lending to the merits of Keynesian policies in work has not changed.” The old Growth Facility (PRGF) grants small Latvia until it sees more progress in times of crisis, the need for counter- recipes of tight fiscal policies, cuts in concessions as “the zero limit on cutting public spending” and cyclical measures, and the need for government spending, and single- contracting/guaranteeing new non- “Latvia is racing to prepare more greater monetary and fiscal flexibil- digit inflation seem to be at the top concessional external debt was cuts to keep its $9.9 billion stabilisa- ity, it is just a matter of practicing of the Fund’s conditions and advice replaced by a small positive amount tion plan on track ... [as] the budget what it preaches. to countries that it has bailed out. [$50 million], making room for the deficit threatens to overshoot the tar- IMF financial crisis loans: no change in In March it was announced that authorities’ debt issuance plans and get of 5 per cent of gross domestic conditionalities, Third World Network Mexico will become the first coun- projects financed by the World Bank product agreed with the IMF.” ◊ tinyurl.com/twn-imfloans try seeking IMF support from the and Asian Development Bank.” Ongoing negotiations over an newly created Flexible Credit Line However, monetary policy is as (FCL), which provides precaution- stringent as in the other loans, For longer versions ary support to what the IMF consid- including a transition to inflation ers strong performing countries (see targeting and a tightening of the tar- additional links, see: of Update articles with page 7). This follows a series of get to below five per cent. brettonwoodsproject.org/update arrangements with low-income The Exogenous Shocks Facility countries and Romania, the third EU (ESF) loan for Malawi shows a Para la versión en español, visite: country to seek IMF support in the slightly higher degree of flexibility, brettonwoodsproject.org/es/boletin past few months. Although most of and does not include structural con- 4 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 Inside the institutions Special drawing rights The special drawing right (SDR) is an international reserve asset, created by Asia do not hold SDRs. the IMF in 1969 to supplement existing official reserves of member coun- Generally SDRs must be issued to countries in proportion to a country’s quota tries. Countries can exchange SDRs for hard currency at the IMF. The SDR is share at the IMF. As the quota is based largely on GDP, rich countries hold the also the unit of account of the IMF and some other international organisa- majority of SDRs. A special one-time allocation of SDRs to countries that joined tions. Its value is based on a basket of key international currencies. the IMF after 1981 was proposed and approved by the IMF board of governors in 1997 but has not yet gone into effect. It requires the approval of capitals of IMF The SDR is in some ways like a currency, but is currently used only at the IMF. members and the US Congress has yet to approve the measure. The value of the SDR is set daily based on a basket of the exchange rates of the Within the IMF, there is an SDR Department which handles all transactions in US dollar, the euro, the yen and the pound sterling. The composition is reviewed SDRs. This department is strictly separate from the IMF’s General Department, every five years to ensure that it reflects the relative importance of currencies in which handles the IMF’s normal operations of lending. Countries that have larger the world’s trading and financial systems. holdings of SDRs than their allocations receive interest based on the SDR interest The SDR is not a claim on the IMF but a potential claim on the freely usable rate. Those countries that exchanged their SDRs for hard currencies must pay currencies of IMF members. Holders of SDRs can obtain hard currencies in interest at the same rate. Thus within the SDR department the interest paid and exchange for their SDRs in two ways: first, through voluntary exchanges between the interest received is equal, and the accounts net to zero. members; and second, by the IMF designating members with large holdings of The IMF Articles of Agreement also allow for SDR cancellations, but this has reserves to purchase SDRs from members who need hard currencies. Such trans- never been done. The IMF cannot allocate SDRs to itself. Many commentators, actions do not involve the IMF staff negotiating with country authorities - mean- including business figures such as George Soros and former US Treasury official ing there is no conditionality or policy changes. Ted Truman, proposed new SDR allocations as a method of combating the finan- SDRs were originally proposed in the late 1950s but were not created until the cial crisis. When the IMF issues SDRs, it is a straight forward increase in the late 1960s. The purpose was to supplement countries’ reserves in the context of global money supply, as the IMF essentially creates the SDR allocations out of the fixed exchange rate system which had been operating since 1944. The system nothing but the commitment of IMF member states. Some critics of this approach had been based on the convertibility of the dollar to gold, but this was proving have said this is inflationary, but others have countered that in a deflationary sit- unsustainable as trade increased because of limits in the availability of gold, and uation, SDR allocations could help maintain price stability. the increasing unwillingness of the US to maintain the system. The SDR also has the potential to supplant the dollar as a global reserve cur- However, since the collapse of the fixed exchange rate system in 1971, SDRs rency if the IMF membership agrees to move in that direction. This would involve have become less important. SDRs can be issued by the IMF only when 85 per much larger allocations of SDRs, as global reserve holdings were worth over $6.7 cent of the IMF membership agrees. This gives the US a veto over issuance of trillion at the end of 2008. The governor of China’s central bank and the UN SDRs. SDRs have been allocated just two times in the history of the IMF, at their General Assembly president’s commission of experts on financial reforms both creation and in 1981, which brought the total allocations to 21.4 billion SDRs backed the idea of a global reserve currency. (almost $32 billion at today’s exchange rates). Only 144 countries have been allo- cated SDRs, because many of the IMF’s current 185 members joined the institu- IMF factsheet: special drawing rights tion after 1981. Notably, countries in Central and Eastern Europe and Central ◊ www.imf.org/external/np/exr/facts/sdr.htm G20 reforms remain house of cards continued from page 1 Spotlight turns to UN more open to civil society input than to building a low-carbon economy. 160-plus Put People First alliance of A week before the G20, the UN the G20. More than 100 organisa- The communiqué promises only to development, environment, faith General Assembly president’s com- tions made submissions, and the “make best possible use” of stimu- groups and trade unions. mission on financial reforms (see final report on civil society opinion lus packages “towards the goal of January’s World Social Forum, Update 64, 63) released its draft was detailed, comprehensive, and building a resilient, sustainable, and produced a statement signed by report. The Joseph Stiglitz-led com- well received by the commission. green recovery” and to “identify and more than 600 organisations. It mission called for global fiscal stim- The global focus will now move work together on further measures includes demands about how best to ulus, a new credit facility with better to a UN conference from 1-3 June in to build sustainable economies.” manage global finance, including governance arrangements than the New York, billed as the follow-up to Friends of the Earth said the G20 controlling capital flows, and calling IMF, an end to pro-cyclical condi- the UN Financing for Development had “short changed people and the for “citizen control of banks and tionality and a rolling back of the conference in Doha. It is unclear planet”. Greenpeace said climate financial institutions.” On the eve of limits on developing country policy how much participation there will change had been tagged on to the the G20, at the ‘World in Crisis’ space created by trade agreements. be by heads of state, especially as the communiqué as an “afterthought”. NGO summit in Prague, a declara- Financial sector recommenda- G20 announced that it will hold On trade the commitment to tion was issued calling for “transfor- tions included the use of rules and another leader’s level summit some- “reach an ambitious and balanced mation towards social justice and incentives to limit excess leverage, time before the end of this year, conclusion” to the Doha round has ecological sustainability as well as prevent tax evasion, and address the probably in the US. not changed from the previous G20 space for alternative systems.” regulatory race to the bottom. On G20 London summit communiqué meeting, since when little has hap- The London Summit was long-term changes to financial reg- ◊ www.londonsummit.gov.uk/en/ pened. Civil society organisations slammed for systematically exclud- ulation, the commission listed seven summit-aims/summit-communique/ worldwide have questioned ing civil society voices. In contrast areas for reform and warned against whether it is a good idea to revive a to most international gatherings “merely cosmetic changes”. Let’s put finance in its place! Call to trade round that developing coun- there was no process for civil socie- The systemic demands were par- action from the 2009 World Social Forum tries have rejected many times. ty accreditation and attendance. Of ticularly eye catching. The call for “a ◊ choike.org/campaigns/camp.php?5 the few civil society organisations new global reserve system” echoed Protest grows Prague NGO declaration attending as media, some had China’s demand to end the US dol- ◊ www.tinyurl.com/pragueNGO Protests took place around the accreditation withdrawn at the last lar’s position as international world in the run up to the G20 sum- minute. One of these denied reserve currency. The commission UN commission recommendations mit, including in India, Philippines, entrance, Benedict Southwark of UK also supported a UN-based Global ◊ www.un.org/ga/president/63/letters/ Indonesia, Spain, Germany, France, NGO World Development Economic Council - essentially recommendationExperts200309.pdf Austria and Italy. In London, thou- Movement said that this “starts to bringing a G20-style structure into UN commission NGO consultation sands marched under the banner of reek of the deliberate exclusion of the UN system. ◊ www.un-ngls.org/spip.php?page=cfr ‘Jobs, Justice, Climate,’ as part of the critical voices.” The UN commission was much 5 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 Not much on offer for poor the World Bank, the IMF and other MDBs. As the crisis is a consequence of structural flaws in Northern countries to counter the crisis rather than Southern economies, emergency finance should not be delayed by negotiating cumbersome By Nuria Molina, Eurodad policy conditions or structural reforms. The situation requires a ‘cri- The world’s poor are being hard hit by a crisis for which they are not responsible. Low- sis waiver’ which ensures that: income countries will face a financing gap of hundreds of billions of dollars this year. funds are quickly disbursed; are pro- vided as grants or on highly conces- More than $2 trillion have been countries.” some of the $100 billion G20 leaders sional terms; no extra policy condi- found to boost Northern economies According to Eurodad calcula- urged MDBs to fund may be used to tions are added; that they respect the and emerging markets. Yet richer tions released before the G20 sum- fill this gap is still up in the air. highest social and environmental countries have committed just over mit, the Bank and the IMF were only According to Bank sources, some standards; and the highest trans- five per cent of the additional planning to provide $12 billion to low-income countries are reluctant parency standards. development finance required to the world’s poorest countries in to apply for frontloaded money compensate low-income countries 2009. Preliminary calculations on the because of the threat of future gaps. Two directions for the shock they face resulting $1.1 trillion for the IMF and MDBs Another share of the funds was A consensus is also emerging that from this crisis. announced in London (see page 1) already budgeted as development the vast capital outflows from devel- show that the IFIs could eventually aid before the crisis broke and has oping countries need to be tackled Effects of the crisis channel up to $50 billion for low- recently been re-labelled as crisis through measures on tax havens Economic prospects for 2009 have income countries. However, almost response. This is the case for Bank and transnational company report- been repeatedly revised downwards none of these funds are additional funds that were earmarked in 2008 ing practices. The latest report by and it is clear that the world’s poor to those already promised by multi- to respond to the food crisis, and Global Financial Integrity estimates are being hardest hit by a crisis for lateral institutions and rich govern- have now been re-labelled as crisis that “illicit financial flows out of which they are not responsible. ments before the crisis. This still falls response under the newly created developing countries are $850 billion According to the World Bank, 53 short of poor countries’ needs and if Vulnerability Fund. to $1 trillion a year.” The volumes million people will fall into extreme disbursement is spread over sever- Over half of the $12 billion for are staggering and they dwarf the poverty in 2009. Bank president al years it could substantially lower the poorest countries this year, is $100 billion of aid flowing every Robert Zoellick reported in a speech the amount available for 2009. funding channelled by the IMF. A year from Northern to Southern before the G20 summit that “200,000 The G20 leaders also committed good share of it will be used to cover countries. Several measures could be to 400,000 babies will die this year to make “available resources for the impact on low-income countries’ taken to avoid these illicit flows. because of the drop in growth.” social protection for the poorest reserve positions and therefore Eurodad and members propos- An early March paper from the countries [through] the World won’t be pumped into the real econ- als go further than the limited IMF said that low-income countries Bank’s Vulnerability Framework”. omy to boost growth and employ- reforms agreed at the G20 (see page would require $216 billion to cover The framework consists of three ment creation, or to support safety 1) They include: the introduction of the impact on their balance of pay- main initiatives, including the nets for the most vulnerable. a requirement that businesses oper- ments during 2009. The Bank pre- Vulnerability Financing Framework In a joint statement on emer- ating transnationally must reveal sented a much higher figure on 8 (VFF), an Infrastructure Recovery gency financing issued at the end of publicly how much profit they make March, estimating that developing Assets Platform (INFRA plus ener- March, UK NGOs stated that and the establishment of strong countries may face a financing gap gy) and a Private Sector Platform. “repackaging aid budgets into new global rules to enable developing of $270-$700 billion. According to The VFF comprises resources funds and programmes is not going countries to determine whether they UN estimates, the funding needed from the existing Global Food Crisis to be enough to help countries have been paid the right amount of to counter the effects of the crisis Response (focused on agriculture); bridge these giant financing gaps, let tax. These rules would require all may be as much as $1 trillion. the International Development alone undertake the policies needed states to exchange automatically the A recent ActionAid report sug- Association (IDA) Fast-Track Facility to stimulate their economies. information they hold on companies gests that African countries alone (resourced with existing IDA money Developing countries must be given and individuals. Banning off-shore will face a real drop in income of $49 for low-income countries); and the the emergency funds necessary to centres and tax havens should also billion between the start of the crisis newly created Rapid Social pursue the kinds of counter-cyclical be considered. in 2007 and the end of 2009. Response Program (providing policies currently being used by rich It is clear that extra funding is Christian Aid said “Already hard- employment through public works countries.” urgently needed, but so too is an hit by soaring food and energy programmes, plus short term social overhaul of the global financial sys- safety nets). What is needed? prices that pushed up inflation, tem and international financial insti- caused food shortages and wide- The World Bank estimates that Whatever quantity of money is tutions. spread hunger, poor countries can IDA, its concessional arm for low- available, international financial Where does it hurt? The impact of the only look on helplessly as demand income countries, will this year institutions need to take immediate financial crisis on developing countries, for their exports drops and vital spend $1 billion more than in 2008. measures to ensure that the money ◊ www.actionaid.org.uk/doc_lib/ remittances sent back by family This increase is the result of a histor- is channelled to poverty reduction. where_does_it_hurt_final.pdf members working in the industri- ically high replenishment of IDA The Eurodad Responsible Finance alised world rapidly dwindle.” which concluded in 2008, rather Charter outlines the kind of princi- The impact of the financial crisis on the than an intended increase in ples that civil society organisations developing world, Christian Aid What is on offer? response to the crisis. Also, a share think are important to ensure that ◊ www.christianaid.org.uk/Images/The- Most low-income countries have of these packages is “frontloaded” development finance will effectively morning-after-the-night-before.pdf very limited fiscal space to react to money - expenditures brought for- contribute to poverty reduction, UK civil society statement on emergency the crisis, and need external support. ward that will therefore not be avail- including “respect for human rights; financing So far, rich countries have not made able in future years. The Bank is respect for internationally recog- ◊ www.ifiwatchnet.org/node/31514 commitments to provide new planning to fast-track $2 billion of nised social, labour and environ- finance to cope with developing their IDA resources in this way. mental standards; parliamentary G20 rescue package for LICs countries’ needs. Leaders at the This is not additional money and and citizen participation in the loan ◊ www.eurodad.org/uploadedFiles/ London Summit restated past aid will certainly create a financing gap contraction process; and public dis- Whats_New/News/Eurodad_G20_Rescu commitments, and suggested in the coming years unless govern- closure of information.” e_Package_Low_Income_Countries_FIN enabling “multilateral development ments come up with a solution, such In the very short-term, the excep- AL.pdf banks (MDBs) to help counter the as bringing forward the next IDA tional circumstances require a effects of the crisis in developing replenishment by a year. Whether speedy and flexible response from 6 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 IMF: Bigger but not much nicer ality) where appropriate rather than on traditional (ex-post) conditional- ity.” That will likely mean an By Peter Chowla, Bretton Woods Project increase in the use of ‘prior actions’, conditions that must be fulfilled World leaders agreed at the G20 to treble the size of the IMF’s resources, but critics prior to getting a loan. Structural worry about strengthening the Fund without fundamental reform to its governance and benchmarks, which are not legally binding, but still force policy conditionality. Further tweaks to IMF programmes are due this year. change, will continue to be used. NGOs are still sceptical. Vitalice In April the G20 agreed to treble the been so problematic in recent IMF income lending framework because Meja from Afrodad noted: “The ex- size of available resources at the loans during the crisis (see page 4), of damaging economic policy con- ante approach is a clear indication IMF, from $250 billion to potentially but using them does occur interest ditionality. that the conditionalities have been $750 billion (see page 1). This was charges. well entrenched in countries’ sys- done in a way that pleased the Gold to fund debt (relief)? tems after the Fund’s decade of Europeans and the US: through tem- More cash, new acronym intervention. The current approach At the same time as these drastic porary agreements from G20 coun- It is envisioned that most of the changes in the IMF’s financing, the merely places the burden of compli- tries to extend loans to the IMF IMF’s new resources will be chan- legislation to authorise gold sales to ance with the Fund’s economic under what is called the New nelled through yet another IMF fund the IMF’s core activities and reform programmes on the poor Arrangements to Borrow (NAB). facility for middle-income countries, solve its income crisis (see Update 61) countries thereby making IMF look Altering the NABs would both be the Flexible Credit Line (FCL), is being drafted in US Congressional good.” temporary in nature and not alter approved in early March. committees, but may come with an Despite the changes, the IMF is quotas, leaving rich country voting The FCL replaces the failed Short added twist. The Jubilee Act, passed still under fire for its policy advice dominance unchanged. Term Liquidity Facility (STLF) by the US Congress in 2008 urges in crisis-hit countries (see page 4). Developing countries and the UN which was only launched in that IMF gold sales be used to pay For example, a report prepared by commission on financial reform had November 2008 (see Update 63). No for additional debt relief in addition the Global Campaign for Education instead called for the IMF to increase country used the STLF, but the FCL to administrative expenses. for the spring meetings in April crit- its resources through either a gener- already has two takers: Mexico, who The G20 seems headed in a differ- icised the impact of IMF conditions al quota increase or selective quota announced interest the day before ent direction, calling for $6 billion on teachers wages in developing increase. These methods would the G20 summit, and Poland, who from gold sales to be part of the dou- countries. have permanently increased the size applied in mid-April. bling of the concessional lending pot of the IMF, potentially diluting the The new FCL includes pre-qualifi- of the IMF. That means the money Pending reviews for LICs dominant voting share of rich coun- cation instead of conditionality, will not fund debt relief but actually The IMF conditionality review tries. meaning a country must be assessed create more debt in developing focussed on overall conditionality Civil society organisations had to be a “strong performer” by the countries as it is lent to the poorest policies and middle-income country demanded both governance reform IMF before it can sign up. The FCL nations. programmes and facilities. and an end to the IMF’s damaging has no hard limit on the amount of “IMF gold sales should be However, the reviews of the IMF’s conditionality in exchange for any money a country can access, lasts for expanded and the proceeds used for low-income country facilities – such increase in resources. The a duration of either six or twelve debt relief or grants without harmful as the Poverty Reduction and International Trade Union Congress, months, and allows up to five years conditions - not to further indebt Growth Facility (PRGF), Policy an umbrella organisation for labour for repayment. some of the world’s poorest Support Instrument (PSI), and unions around the world, had The FCL’s predecessors failed to nations,” said Neil Watkins, of Exogenous Shocks Facility (ESF) – demanded that “both the Bank and deal with the problem of stigma: the Jubilee USA Network. are still in progress. The staff fin- the IMF must stop imposing the fear that signing up for such a facil- ished papers that were discussed by conditionality on developing and ity would spook financial markets Structural conditionality tweaked the board in early March, but no emerging countries that pushes and foster currency speculation or a In early March the IMF board con- concrete decisions were made. The them into pro-cyclical policies.” A sudden stop in capital flows. Only sidered a staff review of conditional- IMF expects to make changes to group of UK NGOs demanded that time will tell if the new FCL will ity which had been called for by IMF these facilities after a second round “any funds provided to existing solve this problem, but financial managing director Dominique of reviews over the summer. international or regional institutions markets had mixed reactions to Strauss-Kahn after the financial cri- The staff had little input from civil should go hand in hand with prom- Mexico’s application, according to sis broke (see Update 64). Breaking society (see Update 64) and it is ises for fast-tracked reforms in the news reports. from tradition, the paper admitted unclear how extensive future con- governance of the institutions.” that the Fund had made mistakes: sultation will be. After the early- Low-income resource bump March board discussion the Fund “In the past, IMF loans often had too SDR’s to the rescue? The G20 commitment to “a doubling many conditions that were insuffi- continued their usual practice of The other massive increase in IMF of the IMF’s concessional lending ciently focused on core objectives.” briefing civil society after a decision resources was through an allocation capacity for low-income countries In a surprise move the board had been taken, rather then provid- of special drawing rights (SDRs), the and a doubling of access limits” is decided to eliminate a whole cate- ing staff papers in advance, so that IMF’s own internally created reserve un-resourced. The Fund’s conces- gory of conditionality, called struc- stakeholders could express their asset (see page 5). The $250 billion sional loans come out of a special tural performance criteria, despite views to the board. The only way to dollars of new SDR allocations was pot of donor resources called the having refused to limit the number push the staff to be more consulta- the maximum that the US treasury PRGF-ESF Trust, which currently is of such conditions just one year pre- tive might be the IMF transparency could support without asking for worth about $23 billion. The G20 viously (see Update 61, 59). policy review (see page 12), as the approval from US Congress. countries have made no specific Structural performance criteria are board could then require that staff An SDR allocation effectively commitments to providing the addi- conditions the IMF places on bor- papers be published before the means printing new money, about tional $23 billion that would be rowing countries to force them to board takes a decision. $68 billion of which will go to mid- needed, as this money can not come change economic policies or the Global unions London declaration, ITUC dle-income countries and $17 billion out of the NAB which will fund the structure of the economy during the ◊ www.ituc-csi.org/IMG/pdf/No_16_- to low-income countries. As SDRs increase in the IMF’s general course of a loan. _G20_London_Declaration_FINAL.pdf are allocated according to voting resources. However, the elimination of this shares at the IMF, two-thirds will go The IMF is supposed to come up kind of conditionality does not IMF overhauls lending framework to rich countries. with solid proposals by the spring mean an end to the practice of forc- ◊ ww.imf.org/external/np/sec/pr/ One key benefit of issuing SDRs meetings, but NGOs are unlikely to ing structural reform. Instead “the 2009/pr0985.htm is that they come without the tradi- be satisfied. Many have called for a IMF will rely more on pre-set quali- tional IMF conditionality that has cessation of the IMF’s current low- fication criteria (ex-ante condition- 7 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 Latin America: Return to the IMF policies and institutions, asserting that institutions such as the IMF or World Bank had been “incapable of or reinforce alternatives? anticipating and controlling the financial disorder.” In recent months, China extend- By Maria Jose Romero, Choike ed currency swap arrangements worth billions of dollars to South Today Latin American countries are faced with the option of returning to international Korea, Hong Kong, Indonesia, Malaysia and Belarus, after rejecting and regional financial institutions - IMF, World Bank and Inter-American Development the requests of rich countries that it Bank (IDB) - or rejecting the failed recipes of the 1990s in order to build and reinforce give substantial funding to the IMF in the absence of institutional alternatives that allow them to face the current crisis. reform. This list is now joined by Argentina to which China has The crisis is a global phenomenon in their decision-making, and reformed and the voting power of offered a $10.2 billion curency swap. that fails to forgive either regions or advancing towards the construction emerging countries increased (see According to Mark Weisbrot of US- countries. The Institute of of South-South cooperation mecha- page 7). This reform should also based think tank Center for International Finance has forecast a nisms, giving shape to a regional include the reduction of loan condi- Economic and Policy Research this dramatic reduction in private capi- currency and setting the Bank of the tionalities for poor countries, and an implies a specific alternative for the tal flows to emerging markets. South into operation. increased capacity to discipline the South American country to escape While capital flows in 2007 amount- On the eve of the G20 meeting, most powerful nations. from IMF influence. ed to $929 billion, they predict in South American presidents travelled However, many people still At the IDB’s 50th annual meeting 2009 flows will only reach $165 bil- to Doha to participate in the second doubt the real magnitude of the in Medellin, Colombia, in March, the lion. Therefore, we are facing the summit of South American-Arab reforms to be implemented at the president of the Central Bank of possibility of a signifi- countries (ASPA), to strengthen the IFIs. According to Argentinian econ- Argentina, Martín Redrado talked cant contraction of South-South axis and join forces omist, Benjamín Hopenhayn, a about the convergence of macro-eco- capital flows and to give more weight to their reform of the IMF’s thinking is not nomic policy and made reference to investment emerging in reject voices at the international level. Since the first meeting credible, since it needs to “change its ideology and that of the 3,000 econ- the proposal for creating a single regional currency. This builds on the economies. The question is how the of ASPA in Brasilia in 2005, Brazilian exports to the Arab omists that are part of the IMF.” On the other hand, economist Anwar initiative of Venezuela to implement and by whom this contraction can be IFIs world have increased from $8 billion to $20 billion; while Shaik, professor at the New School for Social Research, of New York, the Sucre as a trading currency between Venezuela, Nicaragua and Ecuador. Cuba, compensated. Argentinian exports also rose has said that “global coordination Finally, the Bank of the South The political argument from $1.8 billion to $4.5 billion. would be a good idea but the ques- should be launched next May with that Latin American countries used According to Argentinian govern- tion is what interests it will respond starting capital of $10 billion from when moving away from the IMF is ment officials, this relationship has to. I do not trust the IMF or the Argentina, Brazil, Venezuela, the same that led them to accumu- been based on cooperation rather World Bank to tell us what is right. Bolivia, Ecuador, Paraguay and late international reserves and think than on imposition. Their track-record is awful. If coordi- Uruguay (see Update 62). of funding alternatives for the The BRIC group of countries nation goes along these lines, I’d Civil society and organisations in region. Now they must decide made up of Brazil, Russia, India and rather not have it”. the region are demanding that their between participating in the recapi- China, announced in March that Brazilian president, Luiz Inácio governments reject the IFIs and turn talisation of the IFIs and demanding they will only provide more money Lula da Silva, has also intensified his towards people-centred regional reform that gives them more power to the IMF if the institution is discourse against neo-liberalism, its alternatives. US Congress votes against funding World Bank climate fund By Ama Marston, Bretton Woods Project In the midst of intensifying global improvements in energy efficiency over the CTF prior to the March vote instead gave $100 million to USAID discussions on climate change due and readiness for implementation of on the first year appropriation. They for renewable and energy efficiency to culminate in Copenhagen in carbon capture and storage (CCS),“ urged Congress members not to technologies and $10 million to the December, the US congress voted a process of capturing emissions include coal in climate funding. U.N. Least Developed Countries not to fund the World Bank’s Clean from coal and burying them under They highlighted that the CTF crite- Fund, to poor countries, which are Technology Fund (CTF) for 2009. ground (see Update 64). ria would require new coal plants especially vulnerable to the impacts The Bank launched the CTF in “It is a point of great concern that receiving CTF funds to be CCS- of climate change. July 2008 under its climate invest- this fund would support more effi- ready but would not finance CCS “The U.S. Congress wisely nixed ment funds (see Update 63), strongly cient coal technologies while the technology, making it difficult for funding for the undemocratic CTF backed by the US and the UK. The need of the hour is a shift away from the technology to actually be imple- in the 2009 spending bill. Coal fund was ostensibly formed to fund fossil fuel technologies as soon as mented in the developing world. financing allowed under the fund transformational, low carbon devel- possible and not to continue coun- They further argued that even if logically troubled members of opment in developing countries, tries’ addiction to dirty technology,” CCS becomes commercially viable it Congress concerned about financing particularly those with large green- said Vinuta Gopal of Greenpeace is only expected to improve efficien- the dirtiest of fossil fuels in the name house gas emissions. The Bush India. “For example, the World Bank cy by up to 30 per cent. “CTF coal of fighting climate change,” said administration asked Congress to is funding an ultra mega thermal financing is in no way transforma- Karen Orenstein of Friends of the authorise and appropriate US fund- coal power plant in India, which tional. Scarce public clean energy Earth in Washington. ing of $2 billion over three years to would only continue to add to our funding should be used to drive go to the CTF with $400 million in emissions, while this should have down the price of renewable energy UN Funding the way forward 2009, the first year. gone to fund state of the art renew- to make it cost competitive with arti- At UN climate negotiations the G77 In January, the CTF Trust Fund able technologies.” ficially cheap coal and provide clean and China characterised the CTF as Committee released their criteria for A coalition of US NGOs, includ- energy,” the letter states. a donor driven initiative that under- funding, focussing on “reducing ing development and environment In response to concerns over the mines climate negotiations and continued on page 9 emissions by adopting best available groups, wrote to Congress alerting CTF, Congress voted against dedi- competes for funding with UNFCCC coal technologies with substantial them to the substantial concerns cating $400 million to it this year and 8 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 IFIs: Powerful bodies, little the 2010 spring meetings injects urgency into a reform process that had been slated for a 2011 comple- accountability tion date (see Update 63). The G20 communiqué calls for an expansion of the scope of reform to include Efforts to reform the IMF and World Bank’s governance structures may finally be mandates as well as governance. The uncontroversial reforms coming to a head, but they may not go far enough. agreed to in the autumn, including an extra board chair for Africa, were The eminent person committee on likely go to developed countries, an area that was explicitly not in its approved by the Bank’s board in IMF governance reform (see Update worsening the represenation of mandate: the roles of the IMF. February and should be ratified by 62) issued its report at the end of developing countries at the IMF. The most surprising recommen- member countries at the upcoming March. The committee, headed by The committee also supported an dation was buried in a box and only spring meetings later this month. South African minister Trevor accelerated review of quotas at the briefly mentioned in the executive Controversial issues remain Manuel, was set up to examine rec- IMF, asking for it to be finished by summary: “The capital account unresolved, in particular the G24 ommendations made by the IMF’s the spring meetings of the IMF in would fall within the mandate.” developing countries’ demand for Independent Evaluation Office April 2010. This one year time frame This revives a debate that roared in parity of vote between borrowing (IEO) in its report on IMF corporate was also demanded by UK NGOs the late 1990s over whether one of and lending countries, a demand governance in December 2007 (see and trade unions in their statement the IMF’s goals should be universal supported by over 80 NGOs and Update 59). to the UK government before the capital account liberalisation. The numerous influential figures (see While agreeing with most of the G20 meeting. Ambition, however committee was careful to say that Update 62). Europe which controls IEO recommendations, the Manuel seems lacking. The G20 finance min- “the objective was never to champi- over 30 per cent of the vote, is likely committee notably omitted saying isters called for the completion of on the liberalisation of capital move- to continue to be the main blocker anything about transparency and the next review by January 2011. An ments per se, but rather that coun- of change, so far opposing parity. accountability of the Fund’s gover- inside source at the IMF has indicat- tries adequately assess domestic These issues will be the focus of a nance. Instead it focused on the ed that achieving agreement even by macroeconomic and financial risks high level commission on Bank gov- legitimacy and efficiency of the then may be difficult as European ahead of liberalisation.” ernance, chaired by former Mexican Fund’s structure. It supported the countries, the most likely losers from This is dangerous territory, as president Ernesto Zedillo, which activation of the IMF Council and a quota review, were loath critics are concerned about announced its members in March. the elevation of the IMF board from to speed up the existing the IMF’s bias towards The 12 members include Pascal day-to-day operational decision- timetable of completing at issue liberalisation. Yilmaz Lamy, of the World Trade making to a more strategic role. The the review by 2013. is the Akyüz former UNCTAD Organisation, and ministers from committee argued that all its recom- The committee chief economist of the the UK and Germany. The former mendations “should be agreed as a endorsed the often legitimacy Third World Network president John Kufuor of Ghana is single package” of reforms. The committee recommended repeated but not yet tested commitments to of IFIs commented that “devel- oping countries should the sole African representative. The commission should report in that the IMF Council, a body of min- a merit-based process for be extremely careful in October. isters that will have legal authority leadership selection. It also argued accepting multilateral obligations Kofi Annan, former UN secretary to make decisions at the IMF, have for expansion of double majority with respect to the capital account, general highlighted the central prob- only 20 seats compared to the cur- decision making (see Update 55) and implicitly or explicitly, or a broader lem at a conference in Tanzania in rent board’s 24 seats, and that they a reduction of voting thresholds mandate for the IMF unless it unam- March: “At issue is the political be more fairly distributed between from 85 to 70-75 per cent, which biguously recognises their rights to legitimacy of international financial developed and developing coun- would remove the US veto; a seri- impose unilateral restrictions over institutions.” It remains unclear tries. The recommendation for acti- ous test for the stated commitment inflows and outflows, and protect whether the reforms to both institu- vating the council was obliquely of the new US administration to them against litigation by interna- tions will do enough to restore their referred to in the G20 communiqué renewed multilateralism.” tional investors and creditors.” tarnished legitimacy. (see page 1). However, without a Capital account mandate back Bank governance reform Manuel committee report single package of reform to also While the committee ignored the The G20’s call for a completion of ◊ www.imf.org/external/np/omd/ change board seat distribution, 12 of 2009/govref/032409.pdf the 20 seats at the Council would issue of transparency, it delved into World Bank governance reform by Climate fund gin and design and has, along with issue of climate change and funding deal in Copenhagen in December continued from page 8 the US, been one of the main propo- for addressing the issue. However, and will have to ask for an addition- nents of others committing funding. there are rumours in Washington al six months as it gains support for adaptation and technology funds The first £100m of the UK’s £600 mil- that Obama will ask for $600 million ambitious climate change policies that have already been established lion will be deposited this financial for the Bank’s controversial funds, domestically. and are to be operationalised this year, of which £60 million will be including the CTF, when he presents year. Report on the World Bank’s CTF, directed towards the CTF. his 2010 budget request in April. Concerns as to whether the Bank Congressional Research Service Officials from the UK Orenstein concludes that “Both is the most appropriate place for cli- ◊ digital.library.unt.edu/govdocs/crs/ Department for International Obama and Congress have noted the mate funds has also been expressed permalink/meta-crs-10826:1 Development (DFID) maintain that importance of clean technology by members of the US Congress. there is support for the CTF and that cooperation to address climate US NGO letter to Congress This has caused some to speculate US funding will be re-committed in change and are interested in allocat- ◊ internationalrivers.org/en/global- that this may be the beginning of 2010. DFID officials expect that only ing funding to it. To do so in a polit- warming/letter-no-us-money-world- other donor countries backing down a small proportion of the funds will ically and technologically construc- bank-coal-technology-fund on investment in the CTF. go to coal projects, and that develop- tive manner, financing for clean ener- ing countries will largely pursue gy technology can and should be Will UK also back down? other low-carbon projects such as provided under the UN.” For a The UK remains strong in its support renewable technology, energy effi- Regardless, there have been free subscription of the CTF and the climate invest- ciency and sustainable transport. reports that the Obama administra- to this publication see: ment funds (CIFs) more broadly. Environmental groups are hope- tion will not be able to garner suffi- brettonwoodsproject.org/subs This is not surprising given that the ful that US President Barack Obama cient support from Congress in time UK played a critical role in their ori- will bring new commitment to the to sign on to a global climate change 9 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 IFC’s role in Yemen Mining to disclose what they receive. Yemeni work has been slow even though they only have until March by Nadia Daar, Bank Information Center 2010 to implement the initiative. The Yemeni ministry of oil and minerals, Trends in the relationship between World Bank and IFC technical assistance policies and the designated to coordinate the imple- IFC’s investment portfolio raise questions over possible conflicts of interest. Disclosure at mentation of EITI, has also worked with the IFC on the new mining the IFC remains opaque, making details of projects and policies hard to come by. code, yet there was no mention of EITI in the draft code. Over the last couple of years, the Yemen’s mining, oil and gas sectors. a project’s viability.” Nonetheless, Not surprisingly, the IFC’s record International Finance Corporation’s The legal and tax reforms make it nobody representing potentially of transparency is mixed, at best, (IFC) regional advisory service cheaper and easier for the IFC to affected communities was invited to with weak disclosure policies and agency, the Private Enterprise invest. This trend is clear in Egypt, participate in the drafting of irregular adherence. Information on Partnership Middle East/North where the IFC helped draft the Yemen’s mining policy. IFC advisory service projects Africa (PEP-MENA) has provided country’s new mining laws, and also The mining industry is also vul- approved during fiscal year 2007 assistance to the Yemeni govern- has substantial investments in the nerable due to a high level of cor- can be found, with some difficulty, ment in the drafting of the country’s mining industry. ruption, not only in infamous cases on the IFC’s website. However, mining law, which is expected to This conflict of interest is clearly such as the DRC or Guinea, but also details of the Yemen policy reform pass through parliament within a no accident; in a MENA report for in Yemen. are limited to location, a brief few months. This policy is supposed 2008, IFC advisory services stated In September 2007, Yemen description and total estimated to reflect best practices, yield that “by the end of [fiscal year] 2008, became the first MENA country to funding. The limited information increased transparency, efficiency, about 50 per cent of PEP-MENA’s be accepted as an Extractives combined with the complexity of and regulatory accountability, as advisory work, based on project Industry Transparency Initiative IFC’s investments in the mining well as streamline administrative value, was linked to the IFC’s cur- (EITI) candidate (see Update 62). sector, which could take place procedures faced by investors. rent and potential investments” This initiative aims to strengthen through several layers of subsidiary Meanwhile, in March 2008, the Similar trends are seen beyond transparency and accountability in companies, make understanding the IFC took the lead in Yemen’s tax the MENA region: while the Bank the extractives sector, by setting extent of these schemes almost reform, and pushed a reduction of has been supervising the DRC’s standards for companies to publish impossible. corporate taxes to attract greater for- mining policy since 2001, the IFC what they pay and for governments eign investment. The Bank also maintains investments in DRC cop- pushed for this change through per mines. These trends are seen in Yemen’s development policy loan, a other sectors, with the Bank provid- World Bank sabotaging benefit from mining in Africa? direct budget support instrument ing substantial technical assistance A paper published by the Open Society Institute of South Africa and compiled by a that disburses funds based on policy in India’s power sector reforms, group of African and international civil society organisations highlights the Bank's and institutional reforms. The Bank while the IFC has invested in the role in reducing state involvement in mining and promoting the role of the private maintained that to make up for lost country’s power industry, reflecting sector. The report focuses on mining taxation and transparency in seven African tax revenues, the government would the overall strategic plan for each countries, finding that generous tax rates as well as illicit tax avoidance strategies have to double the sales tax to 10 per region established under the mean governments are failing to optimize mining tax revenues. The role the Bank cent in 2009. umbrella of the World Bank Group. played in promoting lower 'competitive' taxes in order to open African mining to An increase in sales tax to make up for the corporate tax reduction, Coherence lacking foreign investors is found to be a key factor. Mining reform was driven by the Bank's overall strategy to reduce the state's would compound the harsh condi- The mining industry is particu- role in development, "in no African country, however, did these tax regimes form tions faced by the population, 42 per larly sensitive because of the vast part of a broader industrial strategy," according to the paper. As well as exposing cent of whom live in poverty and 20 damage to the environment and tax subsidies and avoidance strategies, the report presents recommendations to per cent of whom are malnourished, surrounding communities from African governments and international donors as to how they can increase the rev- according to the Bank. poorly regulated mining projects. A enue collected from mining activities. "African governments should be free to use While the IFC is encouraging the World Resources Institute report this finance to purchase legal and other technical assistance from any service reduction of corporate taxes, PEP- encourages greater community provider of their choice," the report concludes. MENA is helping to draft the min- engagement in extractive projects, ing code. It is very likely that the IFC to “mitigate risks, to improve the Breaking the Curse ◊ sarwatch.org/sarwadocs/BreakingTheCurse.pdf will expand its investments in lives of communities and strengthen FCPF still lacks safe- Bank’s anti-corruption DFID snuggling up to Clarification: Armenia guards, participation stance questioned the Bank? corruption allegations In mid March the committee of participants Doubts have been raised over the efficacy In March the UK Department for We would like to apologise for any confu- for the Forest Carbon Partnership Fund of World Bank anti-corruption efforts. A International Development (DFID) pub- sion due to an article in Update 62 on (FCPF) met. The Bank Information Center recent Wall Street Journal article claims lished its annual report detailing the UK’s water privatisation. In discussing a Bank expressed concerns that the FCPF process that some firms remained on the Bank’s work with the World Bank Group between project in Yerevan, Armenia, it may have not is occurring “without any significant partic- books even whilst under investigation for July 2007 and November 2008, and priori- been clear that all statements about ten- ipation by indigenous peoples or civil soci- collusive bidding in a Phillippines road ties for 2009. The report is late, lacks spe- dering the parliamentary commission, water ety”. NGOs agreed that there was a “need project which was halted in November cific monitorable objectives and shies away services, and project material were allega- for greater transparency in the work of the 2007. In the wake of the Satyam case from critique of Bank practice. DFID’s three tions from the Government Accountability FCPF”; as well as a safeguard review to (see Update 64) US-based NGO year institutional strategy is replaced by a Project (GAP) report. We have no specific strengthen standards and ensure plans are Government Accountability Project (GAP) set of five annual priorities setting out knowledge of the case. The Armenia par- consistent with Bank policies and interna- has criticised "the persistent difference DFIDs agenda to press the Bank to: help liamentary commission as a whole did not tional standards. Donors appear keener on between the disclosure regulations for proj- countries recover from the economic crisis; approach the Bank or GAP, and its final the UNREDD fund which has already ect and loan vendors and the Bank's own support low-carbon growth; promote gen- report did not include corruption allega- begun disbursing grants whilst the FCPF is internal contractors." It concludes in a new der equality; strengthen work in fragile and tions. The final Bank internal investigation yet to pay out. The next committee meeting paper that the breach "is inexplicably conflict-affected countries; and improve was made public in April and "found no will be in June in Switzerland. wide." representation for developing countries. evidence of fraud or corruption." ◊ bicusa.org/en/Article.11092.aspx ◊ online.wsj.com/article/ Full analysis online at: ◊ tinyurl.com/WBfinalreport SB123819888024662027.html ◊ brettonwoodsproject.org/dfidwb09 10 BRETTON WOODS UPDATE NUMBER 65 – MARCH/APRIL 2009 Bank under fire over support for than having tax-funded public delivery of health care. Oxfam responded rapidly, point- private sector health care ing out areas of agreement with the Bank but concluding again that Bank policy and loans, while direct- ed at governments, are often chan- The debate over the World Bank’s support for private sector investment in health care nelled into private services via the provision in developing countries is in the limelight again. government and that issues of good governance alone do not account for A new report by Oxfam entitled profitable treatments rather than government services generally per- the high performance of some devel- Blind Optimism, asserts that while those dictated by medical need. form far better than the private sec- oping countries in health. “The spe- the private sector can play a role in Oxfam points out that data from tor for rich and poor women alike cific policies they have chosen to health care, evidence shows that 44 middle-income countries sug- with respect to childbirth. pursue in health also make a major only scaling up of public sector pro- gests that higher levels of private Drawing on various sources, difference,” Oxfam said. vision of services is likely to deliver sector participation in primary including the Bank, Oxfam con- The Oxfam report also provoked health benefits for poor people. health care are associated with high- cludes that the private sector gener- a response from medical practition- At the heart of the report is a cri- er overall levels of exclusion of poor ally performs worse on technical ers in the British Medical Journal. A tique of the World Bank, which over people from treatment and care. quality than the public sector. For group of doctors, some of whom the past two decades has decried the Women and girls suffer most. To example, in Lesotho only 37 per cent work in private health care globally, failure of public health systems. The make a return on services to the of sexually transmitted infections accused Oxfam of using “data that Bank has used this failure to argue poor, according to Oxfam, the were treated correctly by contracted are thin, selective, and distorted.” for increased investment and International Finance Corporation private providers compared with 57 They also wrote “the data do not growth in the private sector to (IFC), the World Bank’s private lend- and 96 per cent of cases treated in indicate causality, but Oxfam fail to address ever growing health care ing arm, recommends that doctors large and small public health facili- acknowledge this.” Oxfam’s direc- needs. Oxfam points out that in see over 100 patients a day, or one ties, respectively. tor Barbara Stocking replied to the recent years the Bank has acknowl- patient every four minutes. Those doctors point-by-point, including edged the role of government in that can afford it, can attain much Bank disputes Oxfam claims noting: “We do say there is a correla- health care, however more “as a higher standards of care. The launch of the Oxfam report has tion but we do not claim causality. steward or regulator than a provider On the other hand, in 30 case provoked response from the World In fact we state clearly in the paper of services”. Oxfam says, the Bank studies of developing countries Bank. In a point by point rebuttal, that: ‘... although this correlation has contributed to weakening health reviewed by the International the Bank asserts that the research does not clarify whether high levels systems through enforced public Monetary Fund (IMF), the govern- and policies of the Bank and other of private participation cause exclu- sector spending cuts and wide scale ment health spending was found to donors has been misrepresented by sion, it at least suggests that the pri- restructuring of the sector. have reduced inequality. Oxfam. It emphasises that its lend- vate sector does not in general In the face of recent donor-led Research generated by the Bank ing focuses on governments. reduce it.’” The debate will continue calls for encouraging and funding itself supports the importance of However, it feels that more should as more evidence comes in about the the expansion of private sector public health care. In 2004, the be done to leverage non-state actors effect of the private sector on health health care provision, Blind World Bank’s World Development in health given their already large outcomes, but the Oxfam paper Optimism draws on international Report (WDR) (see Update 37) point- presence in the health sector. prompts renewed questioning of the research showing serious failings in ed out that individual health According to the Bank, this does not Bank’s push for private provision. private sector health care. It argues providers cannot be relied upon to necessarily mean growth of the pri- Blind optimism, Oxfam that publicly financed and delivered provide the services they collective- vate health care system. The Bank has further stated that ◊ www.oxfam.org.uk/resources/policy/ services lead to higher performing, ly desire. In practice no country has health/downloads/bp125_blind_optimis more equitable health systems. achieved significant improvement in in many countries it is possible that m_private_health_care.pdf Higher private participation in child mortality without government the private health care sector is too health care is associated with higher involvement. According to the large and that parts of it provide World Bank response to Oxfam costs, according to Oxfam’s research, WDR, “Private sector or NGO par- poor quality care and in some cases ◊ go.worldbank.org/FJVS7II3A0 rebutting the argument that the pri- ticipation in health, education, and may impose too high a burden on British Medical Journal discussion vate sector can provide better results infrastructure is not without prob- the poor via payment for services. ◊ www.bmj.com/cgi/eletters/338/ at lower cost. Part of this is attrib- lems - especially in reaching poor The Bank also argues that good gov- feb16_2/b667 uted to private providers pursuing people.” The report showed that ernance may be more of a key factor UN criticises IFI-led Gender, finance and Bank project design African leaders call for housing policies the IFC falls short greater say in IFIs In February the UN Special Rapporteur’s On International Women’s Day the US NGO, Bank Information Centre, pub- At the close of March’s IMF-Africa confer- report on housing was released, highlight- International Finance Corporation (IFC) lished a report examining World Bank and ence, South Africa’s finance minister Trevor ing the impact of government policies on announced its sponsorship of the first the Inter-American Development Bank’s Manuel sent a clear message to G20 lead- the right to adequate housing, and how Gender Investment Index series, an initia- (IDB) incorporation of participation and ers, demanding that “developing countries they have contributed to the current crisis. tive of its Gender Entrepreneurship accountability into project design. Of projects and emerging markets to be given a The report laments the precedence market Markets programme devised to main- reviewed, only a few had clear reference to greater voice in the governance of the forces are given over housing provision. A stream gender into IFC work. No gender a consultation process or a programme to IMF”. In a joint statement, delegates at the section on World Bank and IMF structural organisations appear to be involved. ensure stakeholder participation. A third conference stressed “Africans must be a adjustment programmes (SAPs) states that Meanwhile US-based NGO Gender Action incorporated participation and accountabil- part of the solution to the global economic in Ghana they “pushed prices beyond released a resource on climate change, the ity into objectives. Fewer included transpar- crisis and Africa must be fully represented affordable levels for a significant propor- first in a series on issues that have gender ent decision-making procedures or a robust in the evolving global architecture”. tion of the population.” SAPs also con- impacts. evaluation system. A majority of the reviewed Delegates also agreed that part of increas- tributed to slum growth, displacement and projects were deemed ‘standard-mediocre’. ing support for Africa would come through ◊ http://tinyurl.com/IFC-gender impoverishment by causing “governments Decentralisation, water and health projects further strengthening of Africa’s voice at to lessen their efforts concerning econom- ◊ http://tinyurl.com/Gender-and-climate were particularly poor. IDB projects did the Fund. ic, social and cultural rights.” much worse than Bank projects. ◊ allafrica.com/stories/ ◊ tinyurl.com/UNHCR-housing-report ◊ bicusa.org/admin/Document. 200903170884.html 100918.aspx 11 BRETTON WOODS UPDATE 2009 World Bank-IMF World Bank and IMF launch disclosure reviews spring meetings schedule by Bruce Jenkins, Bank Information Center Members of staff of the Bank and Fund, board members, development Civil society groups, painfully appeals process for denied requests, and finance ministers are gathered in Washington 25-26 April. aware of information access prob- but the body would be under man- lems at the World Bank and IMF, agement control, not independent. Official meetings hope this year’s reviews of trans- Some of these proposals reflect 24 April Meeting of G24 group of developing countries and G7 parency and disclosure will bring norms found in national freedom finance ministers radical improvement. of information systems and the 25 April International Monetary and Financial Committee meeting Communities and individuals are Global Transparency Initiative’s Tentative agenda: Global economic outlook; implementing often unable to participate in Bank G20 decisions decisions and lack information to Financial Institutions. However, the Transparency Charter for International 26 April Development Committee meeting hold decision makers accountable. paper leaves a lot of room for dis- Tentative agenda: Developing countries and the economic For example, the Bank’s country cretion and does not provide crisis; governance reform programming plans are often not enough information for a full assess- released in draft form. Project ment of the new approach. World Bank, civil society events appraisals are disclosed only after 21 April Gender tools for IFI watchers CSO meeting with IFC and MIGA approval, as are development poli- IMF next in line 23 April African food and financial crisis, World Development Report cy documents - keeping condition- In late March, the IMF initiated a 2010 on vulnerability to climate change, WB participation alities secret. Virtually no informa- much-delayed review of its trans- and accountability in Latin America, IMF transparency policy, tion is disclosed during project parency policy but it provided little hidden impact of hunger on women and children, G20 sum- implementation, and translations of further information on the process. mit outcomes on IFIs key documents are rarely available. The Fund posted three question- 24 April WB civil society engagement, development and social protec- Technical assistance and advisory naires - for civil society, market par- tion in a new financial architecture, IEG, IFI policies on services are often opaque or untrace- ticipants and researchers – with teachers' wages, IFC agribusiness financing, Inspection Panel able. If you want to monitor your public comment due by end of 25 April IMF crisis response, WB disclosure review government’s positions at the Bank, April. well, good luck. The Bank’s board The IMF’s current policy covers 26 April CSO strategy session on IFIs & global economy operates in virtual secrecy: closed only a portion of information held Check back for regular updates from the Bretton Woods Project during meetings, skeletal minutes, no access by the Fund. Few documents are and after the meetings to executive director statements. released in draft form, blocking external stakeholder access to deci- For full details of events, contact information for groups in Washington sion-making. Disclosing country- for the meetings, and links to documents released by civil society, visit Bank proposals In mid-March the Bank kicked off a related documents, such as Article IFIwatchnet. review of its disclosure policy with IV reports, requires explicit member ◊ www.ifiwatchnet.org the release of an ‘approach paper’, country consent for publication. 65 accepting electronic comments Secret “side letters” allow for with- Rethinking finance: Alternative voices for a through 22 May and planning holding of information in which numerous in-country consultations, there may be an abiding public new financial architecture though it has failed to provide ade- interest. The IMF does not provide Rethinkingfinance.org presents alternative ideas and analyses of the quate notice of locations and dates. process guarantees on handling current financial and economic crisis and the reform of global financial A draft policy will be released for information requests nor an appeals architecture. It consolidates all the latest commentary, news, analysis, comments in May/June, with process for those denied access. research and information on civil society action. The work of several approval as early as July. While the IMF’s board releases far international NGOs, the site presents alternative proposals to make The paper articulates four wel- more information than the Bank in finance work for people and the environment. It offers up-to-date come principles as the basis for the the form of Public Information information on the global crises in our economies and financial sectors. new policy: maximum access to Notices, IMF board meetings are information; a limited set of disclo- closed, and minutes and executive ◊ www.rethinkingfinance.org sure exceptions; clear information directors’ statements are withheld request procedures; and the right to for 10 years, if not indefinitely. appeal against denial of informa- The IMF did not provide the pub- tion. Currently, the Bank considers lic withby recommendations for all documents secret unless they are changing its transparency policy Published Bretton Woods Project on a specific list. Under the new and does not yet have a plan to in co-production with approach, the Bank would disclose release a draft policy for public com- all information held by the Bank ment after the comment period. co-produced by unless it falls within a limited set of Aside from a briefing during the disclosure “exceptions”. Bank/Fund spring meetings, the The paper also proposes to release IMF does not plan to conduct con- supervision reports, aide memoires, sultations. Despite substantial infu- ◊ afrodad.org ◊ bicusa.org ◊ eurodad.org ◊ item.org.uy country portfolio reviews, more sions of public money, the IMF con- No permission needed to reproduce articles. Please pass to colleagues interested in evaluation documents, and papers tinues to stand accused of display- the Bank and Fund, and let us know of other groups interested in getting the Update. already considered by the board. ing a cavalier attitude towards The Update is available in print, on the web and by e-mail. Unfortunately some proposed stakeholder engagement. Subscriptions: www.brettonwoodsproject.org/subs exceptions are broadly drawn, Spanish: www.brettonwoodsproject.org/update/index-es.shtml allowing significant categories of ◊ www.ifitransparency.org documents to remain secret, under- Bretton Woods Project Hamlyn House, Macdonald Road, London N19 5PG, UK mining the “maximum access” prin- Bank disclosure review ciple. Key categories of information, ◊ bicusa.org/en/Article.11071.aspx +44 (0)20 7561 7610 such as board proceedings, draft +44 (0)20 7272 0899 IMF seeks views on transparency documents, and third-party infor- firstname.lastname@example.org ◊ imf.org/external/np/pdr/trans/2009 mation, would be unduly circum- www.brettonwoodsproject.org scribed. The paper proposes an A publication of an independent non-governmental organisation, supported by a network of UK NGOs, the C.S. Mott Foundation and Oxfam Novib. 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