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Fw: Infosdebitarsi del 23 settembre 2005: News dalla rete europea sugli incontri annuali di Banca Mondiale e Fondo Monetario internazionale su debito e finanziamenti per lo sviluppo



Infosdebitarsi del 23 settembre 2005: News dalla rete europea sugli
incontri di Banca Mondiale e Fondo Monetario internazionale su debito e
finanziamenti per lo sviluppo

PRS WATCH SPECIAL: Low-Down on the World Bank and IMF Annual Meetings


What's On the official agenda
IMF in LIC: New Policy Instrument Agreed, Exogenous Shocks Facility, New
Debt Sustainability Framework and Review of PRGF Design
World Bank and IMF PRSP Review: It is all about Mutual Accountabilities
State of Play on World Bank Conditionality Review & Call for European
Position on Conditionality
Eurodad Seminars on PSIA and Conditionality

What's On the Official Agenda

The World Bank and IMF Annual Meetings are being held on 24th -25th
September in Washington DC. The World Bank meeting will be dominated by
implementation plans for the G8 debt proposal and Aid for Trade plans in
run up to the Doha Development Agenda, whilst the IMF meetings will look at
strategic direction of the Fund in the medium term and the specific role of
the Fund in Low Income Countries.

The provisional agenda of the World Bank Development Committee is:


1.      Following up on Recent Initiatives on Development Agenda
a.      Strengthening the Development Partnership and Financing for
Achieving the MDGs: An Africa Action Plan
b.      Debt relief
2.      Doha Development Agenda and Aid for Trade


The following progress reports will also be discussed at the meeting:

Aid Financing and Aid Effectiveness
Infrastructure and the World Bank: A Progress Report
Review of World Bank Conditionality
Voice and Participation of Developing and Transition Countries
The 2005 Review of PRS Approach
HIPC Initiative: Status of Implementation
Climate Change, Energy and the World Bank

The provisional agenda of the IMF's International Monetary and Financial
Committee (IMFC) is: 

1.      The Global Economy and Financial Markets-Outlook, Risks, and Policy
Responses
2.      IMF Objectives and Medium-Term Strategy
3.      Strengthening IMF Support for Low-Income Countries-Instruments;
Financing; and Debt Relief

The following Progress Reports will also be discussed at the meeting:

IMF surveillance, crisis prevention, and capacity building; use of IMF
resources
Progress with crisis resolution initiatives
IMF quotas and voice
IMF program on combating money laundering and the financing of terrorism
Activities of the Independent Evaluation Office
In-depth look at papers released on IMF Support in Low Income Countries

The IMF for some time now has been exploring its role in Low Income
Countries (LIC). A number of new papers will be discussed by the board at
the annual meetings. These papers look at the following issues:


1.      A New Policy Support Instrument (PSI) Proposal: The Fund has
officially agreed to establish a new lending instrument for low income
countries. The 'Policy Support Instrument' (PSI) is for countries that do
not need or want to use Fund resources, but are still reliant on the Fund's
signal to access donor aid and debt relief. Conditionality will still be
used, with the Fund monitoring progress against PRGF style macroeconomic
policy prescriptions. If a country is not implementing conditions, it will
be given a fixed period to take action and reviewed again at the end of it.
If they are still off-track the PSI will be stopped and then it is up to
donors whether to continue to fund the country. The Fund's leverage on
ensuring conditions will be met will therefore rest solely on the
signalling power the Fund commands over other donors.


The instrument is being sold to countries that have reached 'macro-economic
stabilisation'. It also appears that access to a new shocks facility being
set up by the Fund (see below) will be contingent on a country having a PSI
in place, in the absence of traditional fund relations. This, obviously is
a huge incentive to encourage take up of the instrument in LIC in countries
that don't need long term IMF finance.
There are many very worrying features tied to the PSI, these include the
institutionalisation of the IMF in countries that say they do not want or
need Fund resources, the enshrinement of the role of the IMF as gatekeeper
and the prevalence of the same restrictive policy prescription on low
income countries.

The instrument is likely to be used first in Nigeria and Uganda. The Board
of the Fund is meeting on September 16th to discuss implementation issues
further.


2.      A New shocks facility for LIC Proposal: The Fund is proposing to
establish a new shocks facility to provide low income countries facing
exogenous shocks with emergency concessional financing.  Limited details
are available as to what this shocks facility will look like. It is
extremely important that it is far more accessible then its predecessor,
which had such high conditions for countries to reach before they could
access it, that it was hardly used.



3.      A New Debt sustainability framework Proposal: The IMF and the World
Bank have finalized a new Debt Sustainability Framework which will inform
their financing policies toward Low Income Countries (LICs) for the
foreseeable future. The Framework will also be used by other creditors,
creditor institutions, and fora such as the Paris Club. They will use it to
determine the amount of debt relief, or new finance a country receives, and
whether its finance comes in the form of grants or loans.The new Framework
aims to put debt at the center of the International Financial Institutions'
(IFIs) decision-making process. Nonetheless, the philosophy that informs
the entire proposal does not come close to addressing the problem of
long-term real sustainability from the perspective of creating conditions
for low-income countries to attain the Millennium Development Goals (MDGs).
Eurodad has produced a short briefing on the Framework, 'Still Missing the
Point: Unpacking the new World Bank/IMF debt sustainability framework'
 available at
<http://www.eurodad.org/articles/default.aspx?id=649>http://www.eurodad.org/articles/default.aspx?id=649


 It appears that discussions on the debt sustainability framework will be
put on hold until early next year, given the focus on the G8 debt deal.


4.      A Review of PRGF Design: The Fund has produced a paper exploring
PRGF design issues. The paper has three background papers, these are
available at http://www.imf.org/external/np/pp/eng/2005/080805a.pdf. The
papers cover the following topics:



Fiscal Policy Design: This paper will admit that the Fund has been unduly
restrictive when setting fiscal targets in LIC countries and that there is
room for more space in setting these targets. However, it will have some
provisos, namely that greater fiscal latitude can only happen if it is
within the limits of debt sustainability outlined in the Debt
Sustainability Paper and feasible (i.e. in line with donor financing).
There are some fears that the paper may have been watered down following a
board meeting last week (8/9th Sept)
Aid Absorption:  This paper essentially argues that countries are failing
to physically spending their aid, which comes in foreign currencies and are
instead letting it sit in reserves. The Fund makes a distinction here,
between countries expanding their budgets on internal goods and services
using the aid as leverage to actually do this and physically cashing in the
foreign currencies they receive and spending them on imports from the
outside. Interestingly, the very reason countries have been reluctant to do
this is because of Fund advice that highlight that this would lead to
increases in inflation. This paper, however, argues that countries need to
begin to access this money and use it to bring in imports from outside. It
therefore signals a sea change in Fund thinking.  An extremely cynical
reading of the paper might conclude that the US is behind this push, driven
by a desire to address its current deficit through promoting LIC to cash in
their dollars and buy more imports.
Institutions: This paper, whilst acknowledging the importance of broad
institutions like judiciary and law in encouraging development,
interestingly highlights that growth can occur prior to the establishment
of institutions. The paper also questions the extent to which external
actors can influence these matters, particularly through conditionality. It
is highly likely, however, that many of these findings will be watered
down, following the Board meeting last week, given their potentially
explosive nature. The paper does advocate for the Fund to be niche in its
work on institutions, focusing on where it can add value, namely around
financial institutions.
A Strategic Review of the Role of the Fund: The Fund will also be releasing
a paper on the strategic role of the Fund. This paper will call on the Fund
to have a leaner role in low income countries, focusing on core areas -
i.e. macroeconomic stability. The paper will, however, note that the Fund
has to more broadly acknowledge the MDGs in its work and address how it can
support this better in its present work. The review also mentions PSIA and
the need for better design of programs.

World Bank and IMF PRSP Review: It is all about Mutual Accountabilities

The PRSP review jointly undertaken by the Bank and Fund has been completed
and the report will be discussed at the Annual Meetings.  The paper
disappointingly fails to provide specific policy proposals for changes
within the Bank and Fund, despite NGO calls for it to focus on providing
real, sustainable and deep policy reforms for both of these institutions.
This lack of follow-up is extremely worrying and something that NGOs need
to point out and work on changing, especially given that the report comes
to some interesting conclusions that could significantly alter the Bank and
Funds approach to PRSPs.

Key points:

Countries Need to be in Charge: Firstly, the Review fully endorses the PRSP
principle of putting developing countries in charge of the development
process as the right approach to aid delivery for both these institutions.
This might not sound that revolutionary, but given the current change of
management within the Bank, this is an important point to reaffirm.

PRSPs about Accountabilities: Secondly, there is an explicit recognition
that the PRSP is much more than just a Bank and Fund donor driven document
and is in fact a political project which seeks to enhance greater
accountabilities: Accountabilities between donors and developing countries
and, perhaps, more importantly, domestic accountabilities between state and
citizen. This recognition of the inherently political aspects of the PRSP
leads the review to argue that:


The participatory aspects of the PRSP process need to be far more embedded
in existing or emerging domestic accountability mechanisms, rather than
creating parallel processes, which has been the current focus. This must
include work on strengthening budget monitoring, policy implementation
monitoring and general moves for greater transparency of information within
countries.


More work needs to be done in understanding the political economy of
countries. The review argues that the Bank and the Fund have taken a highly
technocratic approach in the past and that this must now be complemented
with greater work on a political economy approach.

Tensions in the PRSP: Thirdly, the review acknowledges some inherent
tensions within the PRSP process, namely:


The limitations and dangers of external actors trying to influence internal
political structures. The review notes that there are difficulties in
external actors trying to influence change in this area and highlights that
donors can often tilt accountability towards themselves, inadvertently.
Ear-marking social funds versus ownership: The review points to tensions
with vertical funds that ear-mark social spending and the issue of
ownership.

Ambitious v Realistic macroeconomic frameworks: Finally, in relation to
ambitious and realistic macroeconomic frameworks, the paper is likely to
propose that countries with the help of the Fund, produce two macroeconomic
scenarios. The first scenario highlighting what current rates of aid will
deliver and the second scenario showing what more aid will deliver in order
to encourage greater aid use. This is extremely positive and needs to be
supported. It is still highly likely that the PRGF will, however, still be
decided prior to creation of the PRSP. In theory this would then mean that
PRGF would have to be far more flexible in terms of their fiscal targets to
accommodate these two scenarios.

Follow-up: The Fund will be producing a paper after the annual meetings
focusing on what changes the Fund should implement to ensure it is
effective player within the PRSP process. The Bank, however, does not have
any explicit plans for follow up on the review, sadly. This is a real shame
as the review sets the stage for the Bank to re-think its role and to be
much clearer as to the exact role it should play within this broad,
political process.

State of Play with the World Bank Conditionality Review

The 2005 World Bank Conditionality review has gone to the Board and it
looks likely that the issue will be raised at the Annual meetings, but a
decision on moving forward with the good practice guidelines will not be
taken until later this year. The paper has been slightly revised with a new
definition of ownership and greater awareness of the need for parliamentary
oversight, though the text falls short of many of our NGOs demands. At
present, member states have differing opinions on many of the issues.
Interestingly, a European position was attempted, with Italy leading the
way. However, a draft document was produced, but EU members could not reach
consensus on it. Known member state positions on key issues are outlined
below:


Reducing the number of benchmarks: It would appear that Jim Adams, the Vice
President and Network Head of the Bank's Operations Policy and Country
Services, which has undertaken the review agrees with the need to reduce
the number of benchmarks. It looks likely that the concept of criticality
will be applied to benchmarks and that there will also be greater clarity
as to the distinction between binding and non-binding conditions, in order
to avoid developing country confusion. However, the Netherlands is not
adverse to a rise in the number of conditions in the short term, seeing
this as a direct by-product of moves to budget support.


Stopping Economic Policy Conditionality: There is no consensus among
members on this matter. Interestingly, the Germans, Italians, Spanish and
the UK are all calling for a form of process conditionality on the Bank
when it sets controversial economic policy conditionality. They have
adopted the UK DFID line, in calling for Poverty Social Impact Analysis of
conditions on privatisation and trade liberalisation, stressing the need
for independent checks on this analysis.

The French, however, appear extremely keen on retaining first generation
structural conditionality and the Dutch do not seem that keen to stop it
either.


Ensuring Parliamentary Oversight of Conditions: The Arab states have raised
objections to the Bank interfering into their internal parliamentary
process.

Eurodad is urging European member states to adopt a more progressive stance
and modify the guidelines to ensure they include a specific demand for:

·         A significant reduction in the number of binding and non-binding
conditions
·         The concept of 'criticality' to be applied to the use of benchmarks
·         All Bank non-fiduciary conditions to be contained within mutually
agreed accountability frameworks and all conditions contained within
mutually accountability frameworks to be drawn solely from countries' own
national poverty reduction plans (At present the Bank is committed to
'typically' drawing them from national plans)
·         All World Bank lending documents including program documents,
Letter of Development Policy, tranche release documents and mutually agreed
accountability frameworks to be made public during the negotiation stage of
loan and grant deliberations and be easily accessible. Civil society and
parliamentary actors should also be given an opportunity to participate in
these negotiations.
·         All economic policy conditionality to be stopped by the Bank
regardless of whether it is contained within a well-designed and broadly
owned government strategy
·         Mandatory Poverty Social Impact Analysis for all economic policy
reform conditions (such as privatisation, trade liberalisation, and user
fees) with independent verification.

Finally, given that progress in implementing existing policies like the
development lending policy has been painfully slow, it is extremely
important that an accountability mechanism is in place to monitor progress
in this area. European member states should call for an annual monitoring
report on World Bank conditionality.  This report should contain
independent views from civil society and parliaments on the state of World
Bank conditionality on the ground.  

For more information on the findings of the World Bank Conditionality
Review go to: Loosening the Leash: Eurodad Briefing -
<http://www.eurodad.org/articles/default.aspx?id=645>http://www.eurodad.org/articles/default.aspx?id=645

Eurodad Seminars on PSIA and Conditionality

Eurodad is hosting two seminars in Washington in the week preceding the
World Bank and IMF Annual Meetings. The first seminar will launch Eurodad's
Advocacy Report from its six month study on Poverty Social Impact Analysis
(PSIA). The second seminar, co-hosted with ActionAid International,
Christian Aid, Debt and Development Coalition Ireland and the ICFTU, will
take a critical look at World Bank Conditionality and ways forward.

·         "Open on impact? Slow progress on World Bank and IMF poverty
analysis" , 12.30 - 2.00 Thursday 22nd September, Interaction, 1717
Massachusetts Ave. NW, Suite 701 Washington, DC 20036

Eurodad has been conducting research on how PSIA is being carried out by
the World Bank and other development partners and has commissioned case
studies in Ghana, Mali, Vietnam and Nicaragua. The seminar will have
presentations from the case studies and outline Eurodad's key
recommendations for how to ensure PSIA is carried out more effectively in
the near future.

Chaired by Jo Marie Griesgraber from the New Rules Foundation), key
speakers include  Lucy Hayes (Eurodad), Rakesh Rajani (Hakielimu,
Tanzania), Luca Brabone (WB), Robert Gillingham (IMF).

Main report:
<http://www.eurodad.org/articles/default.aspx?id=650>http://www.eurodad.org/articles/default.aspx?id=650
Case studies:
<http://www.eurodad.org/articles/default.aspx?id=647>http://www.eurodad.org/articles/default.aspx?id=647


·         What Future for World Bank Conditionality, 3:30 - 5:15 PM, Friday
23rd September, ROOM W150, 8th Floor, The World Bank, 1818 H Street, N.W.
Washington, DC

World Bank conditionality is more important now than ever before. Much of
the new aid and debt relief agreed at the G8 summit will be channeled
through the Bank, and come with Bank conditions attached. Increasingly,
bilateral donors are also linking their aid to World Bank conditions.
ActionAid International, Christian Aid, Debt and Development Coalition
Ireland, Eurodad and the International Confederation of Free Trade Unions,
members of the Global Campaign Against Poverty, invite you to a critical
debate about the future of World Bank conditionality. The debate will
explore not only the recent findings and recommendations of an internal
review by the Bank on its conditionality practices, but also critical civil
society research. Looking to the future the debate will focus on how to
reform Bank conditionality so that it contributes to rather than detracts
from poverty reduction, democracy, accountability and country ownership.

 Chaired by Peter Bakvis, International Confederation of Free Trade Unions
(Director, Washington Office ICFTU), key speakers include Abbie Shawa MP,
(Member of the Budget and Finance Committee of Parliament and Executive
Secretary of MAPCOI, Malawi), Jean Somers, (Coordinator, Debt and
Development Coalition Ireland), Jim Adams, (Vice President and Network
Head, Operations Policy and Country Services, World Bank), Stefan Koerble
(Operations Policy and Country Services, World Bank).
For information about further CSO events in Washington around the Annual
meetings please go to
<http://www.bicusa.org/bicusa/index.php>http://www.bicusa.org/bicusa/index.php
For more information on official events please go to
http://www.imf.org/external/am/2005/index.htm

---------------------
Hetty Kovach
Poverty Reduction Strategies Policy and Advocacy Officer
European Network on Debt and Development
Tel: + 32 2 543 9062
Skype: eurodad-hetty
<http://www.eurodad.org>www.eurodad.org

Subscribe to our two regular e-bulletins, on debt and on PRSPs, at:
<http://www.eurodad.org/aboutus/default.aspx?id=227>www.eurodad.org/aboutus/default.aspx?id=227
See EURODAD's briefing 'Devilish details: Implications of the G7 debt deal'.
Available in English, Spanish and French at:
<http://www.eurodad.org/articles/default.aspx?id=628>www.eurodad.org/articles/default.aspx?id=628
EURODAD is a non-profit organisation (ASBL/VZW) registered in Belgium and
the Netherlands.
For a list of EURODAD member organisations across Europe, or to find out
how to join, see:
<http://www.eurodad.org/members/default.aspx>www.eurodad.org/members/default.aspx



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