FINANCE: IMF, World Bank Meetings: Agendas Great and Small

By IPS Correspondents Reprint | | Print |

Abid Aslam

WASHINGTON, Oct 18 2007 (IPS) - Downtown Washington has begun to resemble a menagerie as the World Bank and International Monetary Fund (IMF) gear up for annual meetings.

Outside, the dog-and-pony show: Lobbyists darted about the agencies’ offices Thursday on missions to save or exploit rainforests, reduce Third World debt or clinch new deals, block the construction of new dams or build new factories. Plaintiffs from far-flung regions sought officials with whom to lodge grievances about bank-funded projects or fund-prescribed policies. Activists and police scoped the urban landscape in advance of protests and a “people’s tribunal” – or populist lynching, depending on one’s perspective – against the multilateral lenders.

Inside, the spring chicken and the lame duck: Robert Zoellick, the bank’s president since July and Rodrigo de Rato, the fund’s outgoing managing director. Both touted efforts they said would transform their institutions.

The IMF’s 185 shareholders neared consensus on increasing the voting power of developing countries long under-represented at the global financial institution, de Rato said.

“There is increasing convergence among members,” he told reporters ahead of the Oct. 20-22 meetings.

The IMF’s board of governors, made up of finance ministers and central bank chiefs from member states, agreed to the voting reform at last year’s annual meeting in Singapore. China, Korea, Mexico, and Turkey have reaped the initial gains. The fund now is preparing further redistributions to be completed next year.

“Reform is not a sprint, but a long-distance run,” he said. “The reform has a two-year calendar. By any standard, two years to reform an international institution with 185 members, nobody can say that’s moving slow.”

No other major international institution had taken such a direct approach to righting its governance, he added.

The current effort includes proposals that have been bandied about for nearly a decade but De Rato, who took office three years ago, is said to have worked assiduously toward the goal of updating the balance of power among members. The results, it is argued, will reflect changes in the global economy and buttress the agency’s legitimacy by giving low-income members a bigger stake in it.

Even so, activists and the disgruntled governments of some developing countries have said reforms will prove cosmetic unless wealthy IMF members are stripped of their effective veto over the agency.

At the World Bank, Zoellick, who took office in July after an ethics scandal led to his predecessor’s ouster, said he would seek private-sector aid for the world’s poorest countries.

A number of companies had expressed interest in contributing to the International Development Association (IDA), through which the bank disburses money at little or no cost to the lowest-income countries, most of them in Africa.

The bank set a precedent last month when it announced it would more than double its own contribution from profits to 3.5 billion dollars. This, as Zoellick tries to squeeze 39 billion dollars out of the bank’s shareholders to replenish IDA’s coffers for 2009-2011.

Haggling often is intense in the face of members’ unwillingness to spend more money; hence Zoellick’s push to rustle up some private manna.

“This is at an early stage,” Zoellick told reporters. The bank has had “some discussions” with firms, which he declined to name, “but we also have to work this through our board processes.”

How exactly Zoellick intends to involve and monitor private donors, how large a stake they will be allowed to take, and what member governments will make of his proposals remain to be seen but at least one critic urged caution.

“The private sector getting involved in the replenishment of IDA raises serious questions,” said Oxfam policy analyst Elizabeth Stuart. “It’s a public institution accountable to citizens in rich and poor countries. Accepting private sector funds could open serious accountability questions.”

The IMF’s policy-setting International Monetary and Financial Committee is due to meet on Saturday, followed by the bank-fund Development Committee on Sunday. The agencies’ full boards of governors are to hold their plenary session on Monday. The Group of Seven advanced economies, Group of 24 developing countries, and other self-selecting blocs also will meet in coming days to hammer out common positions and press separate agendas.